2018 was supposed to be the year when Signet Jewelers in the United States and UK started to see results from its root and branch Path to Brilliance turnaround plan.
Instead, the crucial Christmas trading quarter that covers the three months ending February 2 was a flop for the group, with heavy discounting driving same store sales down by 2% across the group. The UK performed far worse than North America with a 5.8% drop in sales for its value business H. Samuel and 8.9% for the more upmarket Ernest Jones.
Seb Hobbs, Signet’s president and chief customer officer has left the company, but will continue to be paid for a year and will help Ms Drosos for three months.
The group’s chief financial officer resigned in March.
In the United States, Jared was the worst performing part of the business, with same store sales down 8.9%. Zales was up 2% in the quarter while the giant multiple Kay was down just 1.6%.
Across America, ecommerce sales increased by 6.9%, and brick and mortar sales declined 2.5% on a same store sales basis. Total sales for the quarter were $5.6 billion in America alone, a dip of 0.5%.
Virginia C. Drosos, Signet’s chief executive officer, in her analysis of the final quarter of its 2019 financial year, admitted that the holiday season was disappointing. “In Fiscal 2019, we began our Path to Brilliance transformation journey, building foundational capabilities to drive future growth. We made progress on our Path to Brilliance initiatives, achieving double-digit eCommerce growth, delivering $85 million of net cost savings, and continuing to optimize our store footprint. However, we did not finish the year as strongly as expected due to a highly competitive promotional environment, continued consumer weakness in the UK, and lower than expected customer demand for legacy merchandise collections that impacted our holiday fourth quarter results.”
Part of the Path to Brilliance plan is to close unprofitable stores and increase ecommerce sales. Almost 10% of stores closed in North America, with 232 shuttered and 2,857 remaining.
World-wide, the group has closed 262 stores in the past year and expects to dispose of another 150 or more in the current financial year.
Signet’s total global sales were $2.15 billion, down $138.4 million or 6.0%, in the 13 weeks ended February 2, 2019 on a reported basis and down 5.4% on a constant currency basis.
Ms Drosos concludes: “Using important learnings from Year One of our transformation, as we look forward to Fiscal 2020, we are accelerating initiatives to further develop the seamless and personalized OmniChannel jewelry experience that Signet can uniquely provide. This includes: 1) reinvigorating our product assortment in-store and online with more exclusive pieces and customization; 2) increasing targeted messaging and promotional effectiveness; 3) improving our eCommerce and mobile technology; and 4) enhancing full service offerings like repairs and piercings. Higher levels of investment in these growth initiatives are expected to be funded by aggressively addressing our cost structure and more efficiently managing our inventory. We expect these initiatives to improve the trajectory of our same store sales, operating margins and cash flow generation, and to bolster our balance sheet over the course of our multi-year transformation journey.”
Shares in Signet have dropped in price from $68 in September, 2018, to a low of $24 in January, but have since nudged up towards $28.