Signet will close more than 200 stores in the United States this year in an effort to increase the productivity of its remaining network.
The group’s full year results for 2018 showed same store sales declined 5.2% in the fourth quarter and declined 5.3% for the full year ended February 3.
“Fiscal 2018 was a challenging year for Signet,” says Signet Jewelers chief executive officer Virginia Drosos. “We gained sales momentum in our Zales banner in the fourth quarter as our strategic initiatives began to take hold, but we experienced challenges at our Kay and Jared banners, including execution issues related to the first phase of our credit outsourcing transaction.”
The end of year report was accompanied by an extensive briefing on a plan dubbed Signet Path to Brilliance that aims to reinvigorate the group and prepare it for a future with fewer, higher quality, stores operating in tight alignment with an improved digital presence.
“Today we are announcing a three-year company-wide comprehensive strategy to reinvigorate Signet and transform the company to be a share-gaining, omnichannel jewelry category leader. Our Signet Path to Brilliance plan will advance our strategic priorities across our customer first, omnichannel and culture of agility and efficiency pillars. Plan initiatives build on the strength of the Signet banners and focus on 1) investing in eCommerce and product innovation, 2) enhancing customer value, and 3) increasing cost competitiveness. We will also look to further optimize our real estate portfolio through opportunistic reinvestment in innovative store concepts, relocations to off-mall locations, and strategic store closures. Looking ahead, Fiscal 2019 will be an important transition year as we implement our transformation plan, and we expect to see improved operational and financial performance beginning in Fiscal 2020,” Ms Drosos describes.
A forward-looking statement warns investors that same store revenue will continue to fall by “low to mid single digit percentages” in fiscal 2019 that ends in February next year. Total revenue is predicted to be virtually flat at between $5.9 billion and $6.1 billion in 2018-19, compared to $6.25 billion in the last financial year.
Shares in Signet fell by 4% as the financial results were disclosed before recovering.
The group feels it has too many stores competing for customers in the same location, and hopes that a major program of closures will concentrate business in remaining stores.
“Signet anticipates closing more than 200 stores by the end of Fiscal 2019. As approximately three-quarters of stores expected to close are within the same mall as another Signet banner, the company expects approximately 30% of revenue from closed stores to transfer to remaining Signet stores,” the company states.
Kay has endured the toughest 12 months of the Signet brands, with same store sales dropping by 8%. The business operates in the hard-hit value end of the watch market, with brands including Citizen, Bulova, Movado and Tissot.
Jared, which is a little higher up the watch industry food chain with brands such as Breitling, Omega and TAG Heuer, fared better with same store sales down 5.5%.
Zales, which is predominately a diamond store, but does sell Movado, Citizen and Tissot watches, saw same store sales fall by 2%.