National Jeweler Network

Financial Reporting

Branded jewelry, watches hot at Sterling

By Michelle Graff

January 10, 2014

Akron, Ohio--Sterling Jewelers Inc. reported a 5 percent year-over-year increase in same-store sales in November and December, driven by strong sales of branded merchandise and watches as well as beads.

Total sales for Sterling Jewelers in those two months rose 8 percent. Sterling is the parent company of Kay Jewelers and Jared the Galleria of Jewelry as well as a number of regional brands, such as JB Robinson and Shaw’s Jewelers.

Same-store sales at Kay and Jared were up 6 percent in November and December. Sales at the company’s regional brand stores declined, with executives noting the retailer plans to continue closing regional brand stores until the count is down to 100, from just under 200.

E-commerce sales rose 25 percent in the period while the company’s outlet business was “very good.”

Sterling parent company Signet Jewelers Ltd., which also operates stores in the United Kingdom, reported that overall, its same-store holiday sales increased by 5 percent and total sales were up 8 percent. This includes a 5 percent increase in U.K. same-store sales and a 7 percent increase in total sales there.

Despite the relatively solid increase in U.S. same-store sales, company executives noted in Thursday morning’s conference call that an increasingly promotional environment, bad weather and a decline in foot traffic combined with higher-than-expected commodity costs cut into profitability.

“We saw the declines in traffic going into December [and] it became a little bit more of an overall more-promotional retail environment. That was within our category of watches and jewelry as well as other retailers that we saw,” Signet CEO Mike Barnes said in response to an analyst’s question about discounting in the jewelry space. “I don’t think anybody got crazy as far as how they promoted.
It wasn’t a big, giant yard sale going on out there in our industry. But it was more promotional, traffic was down, everybody was fighting for conversion.”

Signet has lowered its expectations for fourth-quarter earnings due to the continuing need to lower prices and bad weather impacting sales.

Chief Financial Officer Ron Ristau said during Thursday’s call that the post-New Year’s snowstorm and the extremely cold temperatures, combined with the snowstorms in December, cost the retailer $15 million to $18 million in sales in the fourth quarter.

Signet plans to announce its fourth quarter and fiscal year results on March 27.