Signet sees sales plunge, plans closure of 380 stores
International jewelry retailer Signet Jewelers Limited reported a 40.5% decline in sales in the first quarter on Tuesday and announced that it is planning to shutter 380 stores in line with a strategy to pivot towards a more digitally focused model.
For the first quarter ended May 2, 2020, the company, which operates brands including Kay Jewelers, Zales and Jared in the U.S., and H.Samuel and Ernest Jones in the UK, reported total sales of $852.1 million, down from $1.4 billion in the same period in the previous year. Same store sales fell 38.9%.
With all of Signet’s 2,800 North American stores closed since the end of March due to the Covid-19 pandemic, along with a number of international locations, the company saw a strong increase in demand in its digital channels. However, this uptick in interest was somewhat hampered by the shut-down of the retailer’s James Allen distribution center in New York, ultimately resulting in a 6.7% rise in quarterly e-commerce sales.
Digital growth was strongest in the company’s international segment, where e-commerce sales rose 37.2% but were not enough to offset a 46.6% decline in brick-and-mortar revenues, leading to an overall decrease of 37.5% in same store sales.
In Signet’s North American segment, same store sales fell 39.0%, reflecting a 4.3% increase in the e-commerce channel and a 44.6% decrease in brick-and-mortar revenues.
The company’s quarterly net loss came to $198.6 million, or $3.83 per diluted share, widening significantly from a loss of $18.2 million, or $0.35 per diluted share, in the prior-year period.
In response to the challenges posed by the coronavirus crisis, Signet has accelerated plans to become a “digital-first, omnichannel retailer.” The company has therefore announced that it will not reopen at least 150 North American stores and 80 UK-based stores, and will also close a further 150 brick-and-mortar locations before the end of 2020.
In addition, Signet has been taking advantage of the unprecedented situation to test out new technologically-enabled initiatives for interacting with consumers, conducting 100,000 virtual jewelry consultations since it closed its North American stores in March.
“We began our fiscal year with strong Valentine's Day sales performance, and then quickly pivoted and further adapted our e-commerce operating model to serve customers during stay-at-home restrictions with new technology, virtual consultation and selling solutions,” explained Signet CEO Virginia C. Drosos in a release.
“We are gathering valuable insights on customer behaviors and plan to use these learnings to enhance our competitive advantage and emerge stronger from the crisis with optimized virtual and physical footprints to meet our customers where and how they choose to shop,” she added.
As of June 2, Signet has reopened nearly 1,100 stores in states such as Arizona, California, Georgia, North Carolina, Ohio and Virginia.
Due to continued uncertainty about Covid-19, the company has not provided financial guidance for the second quarter or full fiscal year 2021.
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