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Signet Jewelers could close 400 stores this year as Covid quarter costs it $291 million in losses

Signet Jewelers

Same store sales for Signet Jewelers fell by 38.9% to $852.1 million for the 13 weeks from the beginning of February to May 2, the group announced today.

Shares opened almost 10% lower at around $15 as the results disappointed analysts, but are still trading almost three times higher than the $5.6 per share price at the end of March as the Coronavirus pandemic swept across Europe and the United States.

North America, which began the tightest phase of its shielding in the last week of March, saw sales decline 39% to $781.1m, in part because of a 6.5% drop in average transaction value. The number of transactions dropped 34.5%.

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In the UK, where all stores closed on March 23, same store sales were down 37.5% to $64.9m as the number of transactions fell 41.3%. ATVs ticked up slightly by 2.7%.

Signet started reopening stores in May and now has more than 1,100 of the company’s 3,200 stores in North America and the UK operating.

However, around 150 stores in North America and 80 in the UK will permanently close and an addition 150 stores are likely to close by the end of the year.

Virginia Drosos, Signet’s chief executive officer, makes a notably upbeat assessment of the challenges facing the group through the Covid-19 crisis and its impact on the rest of this year.

“Throughout the Covid-19 crisis, we have prioritized the health and safety of our team members and customers with every decision we make,”she says.

“Our excellent team, operating in a culture of agility and efficiency, has been integral in allowing us to rapidly adapt and respond to this environment, building on the first two years of our Path to Brilliance strategy and accelerating our transformation into a digital-first, omni-channel retailer.

We quickly pivoted and further adapted our eCommerce operating model to serve customers during stay-at-home restrictions with new and new technology and virtual consultation and selling solutions. We are gathering valuable insights on customer behaviors and will 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. We have leaped forward in our digital journey while also making significant progress controlling costs, prioritizing investments to drive sustainable growth, and preserving liquidity,” she adds.

Ecommerce sales rose by 15.8% in North America on a like-for-like comparison and by 37.2% in the UK.

Signet Jewelers lost $291 million in the quarter, but retained cash and equivalents of $1.1 billion.

 

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Rob Corder

The author Rob Corder