Signet Jewelers sees loss widen despite sales growth
The world’s largest retailer of diamond jewelry Signet Jewelers Ltd reported on Thursday that its net loss deepened from $12.1 million in Q3 2018 to $38.1 million in Q3 2019, as slight sales increases failed to offset the negative impact of restructuring charges and other costs.
The company’s net sales totaled $1.19 billion in the quarter ended November 3, 2018, up 3.0% (3.3% in constant currencies) from the $1.16 billion reported in the prior-year period.
This progress was driven by a rise in same-store sales of 1.6% and was also positively impacted by the addition of online diamond brand James Allen, acquired by Signet in September 2017.
Indeed, James Allen sales totaled $52.5 million in Q3 2019, reflecting a 13.6% increase compared to the third quarter in the previous year.
Overall e-commerce sales came to $125.0 million, up 54.9% from the prior-year period, and accounted for 10.5% of total quarterly sales, compared to 7.0% in Q3 2018.
By region, the company reported a 2.1% increase in same-store sales in North America, led by the Piercing Pagoda brand, which achieved a comps rise of 16.2%, followed by Zales (2.8%) and Kay (0.7%).
International same-store sales, on the other hand, decreased 3.1%, as higher sales of prestige watches were offset by slumping diamond jewelry and fashion watch sales.
Signet’s progress in revenue was ultimately dragged down by charges related to the outsourcing of credit, an unfavorable banner mix and higher advertising costs, as well as some $9.5 million in restructuring charges.
This led to the company reporting an operating loss of $48.8 million, compared to an operating income of $5.5 million in the third quarter of the previous year.
Looking forward to the fourth quarter, Signet expects same-store sales to see change in the range of a decrease of 1.5% to an increase of 1.0%, while total sales are predicted to be between $2.17 billion and $2.22 billion.
“As we enter the holiday season, amid a highly competitive market and with key selling weeks ahead, we are keenly focused on delivering on our holiday plans and implementing the beginning stages of our transformation initiatives in our stores and on our websites,” said Signet Jeweler CEO Virginia C. Drosos in a release. “While still early, we believe the initiatives underway will serve as a foundation for our future efforts as we move along our transformation journey.”
The company has also revised up its full-year guidance and now expects same-store sales to be flat or increase by up to 1.0%, while total sales are predicted to be in the range of $6.26 billion to $6.31 billion, compared to a previous outlook of between $6.2 billion and $6.3 billion.
Signet's stock was down 18.1% at the closing bell on Thursday.
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