Signet Jewelers raised its outlook for the year after product initiatives and clearance sales drove revenue growth in the second fiscal quarter.
Sales increased 1.5% to $1.42 billion in the three months ending August 4, the retailer reported Thursday. Same-store sales — at branches open for at least a year — rose 1.7%, reflecting the impact of attempts to improve “newness” and change the focus of product assortments, the company said. It also held discount promotions to make room for new items.
Signet now expects sales in the range from flat to down 1.5% in the current fiscal year ending January 2019, from an earlier forecast of a decline in the low- to mid-single-digit percentages. It also improved its earnings guidance. Its shares were up 24% in early trading Thursday.
The jeweler is in the preliminary stages of its “Path to Brilliance” program, aiming to transform the business following weak sales. That plan includes enhancing its range of products, improving its e-commerce segment, and making its prices more competitive.
“During the second quarter, we continued to see stabilization in same-store sales, and we remain confident that we have the right strategies in place to continue to drive operational improvement over the long term,” said Signet CEO Virginia Drosos.
The jeweler remains cautious for the important fourth quarter as many of its initiatives will not go into effect until later this year, Drosos added.
Same-store sales at Signet’s Zales division grew 7%, while Jared was up 1.2%, outweighing a 2.1% decline at Kay Jewelers. Sales at James Allen, the e-commerce platform Signet acquired last year, rose 25% by the same measure. Total e-commerce proceeds leaped 83% on a reported basis, driven partly by the contribution of James Allen.
The jeweler also noted an increase in bridal- and fashion-jewelry sales in North America due to a greater percentage of new products in the core offering, in addition to the impact of clearance sales.
However, the company recorded a loss of $31.2 million versus a profit of $85.2 million a year ago due to restructuring charges related to the Path to Brilliance program and the impact of Signet’s recently completed outsourcing of credit operations.
Meanwhile, Signet chief financial officer Michele Santana will leave to pursue other opportunities after eight years at the company, Signet also announced Thursday. She joined Signet in 2010, and became CFO in 2014, overseeing the acquisitions of Ultra Stores, Zale Corporation and James Allen parent company R2Net, as well as the credit outsourcing.
Santana will remain in the role until Signet appoints a successor, and will stay on as an adviser until next year. The company expects to appoint a new CFO by the end of January, it said.
Image: Cortney Martin