National Jeweler Network

Financial Reporting

Comps up 4 percent, color ‘hot’ at Sterling

By Michelle Graff

November 26, 2013

Akron, Ohio--Sterling Jewelers Inc. reported Tuesday that same-store sales increased 4 percent in the third quarter, led by strength in sales of colored diamond jewelry, bridal and watches.

In the third quarter ended Nov. 2, total sales for Sterling Jewelers, operator of Kay Jewelers and Jared the Galleria of Jewelry, rose 10 percent year-over-year from $575.6 million to $632.1 million. E-commerce sales increased 12 percent, representing a full year since the relaunch of both the Kay and Jared websites.

Kay Jewelers posted the highest year-over-year comp increase, with same-store sales rising 6 percent. Same-store sales were up 3 percent at Jared and fell 2 percent at the retailer’s regional brand stores.

Signet CEO Mike Barnes said during Tuesday morning’s earnings call that strength in diamonds, colored diamonds and watch sales drove the quarterly increase.

He said the retailer’s lines of jewelry incorporating colored diamonds--the Vivid collection of treated colored diamonds at Jared and the Shades of Wonder line at Kay--have been “extremely hot.”

He noted that the new Waves collection in the Open Hearts by Jane Seymour line, a popular line Kay has carried for a number of years, incorporates treated blue diamonds now.

Total same-store sales for Sterling Jewelers’ parent company, Signet Jewelers Ltd., which also operates stores in the United Kingdom, rose 3 percent in the quarter while overall sales were up 8 percent from $716.2 million to $771.4 million.

Net income was down 4 percent from $34.9 million to $33.6 million.

Online sales rose 16 percent from $19.6 million to $22.8 million. Consolidated gross margin was 31 percent of sales, down from 32.9 percent of sales in the third quarter of last year.

Barnes said during Tuesday’s call that the retailer is “very pleased” with the start of the fourth quarter and expects a good holiday season barring any “negative macro-events.”

He said the retailer rolled out a number of new products in the U.S. market in the third quarter, including larger center stones in its Neil Lane-branded line of bridal jewelry, inserts and wraps for the Tolkowsky line and Leo Artisan diamonds at Kay Jewelers.

Also during the third quarter, Signet announced it had purchased a polishing facility in Gaborone, Botswana, after years of saying it wanted to increase its direct sourcing of rough diamonds.