Signet Exceeds Expectations With a Strong Q3

Akron, Ohio—Signet Jewelers Ltd. exceeded expectations in the third quarter, as comps rose at all U.S. mall-based banners and online sales posted double-digit growth.

In the third quarter ended Nov. 2, Signet’s same-store sales rose 2.1 percent year-over-year.

E-commerce sales were up 11 percent to $139.9 million, and accounted for 12 percent of total sales, up from 11 percent a year ago.

Brick-and-mortar same-store sales grew 1 percent.

Total sales reached $1.19 billion, essentially flat year-over-year on a both a reported and constant-currency basis.

Signet also reported a smaller-than-expected loss in the quarter, $43.7 million, causing its shares to rise 8 percent in pre-market trading.

It was the retailer’s North American chains—particularly Piercing Pagoda—and online sales that drove the increase while U.K. stores struggled due to Brexit, with comps dropping 5 percent, executives said on Thursday morning’s earnings call.

North America same-store sales were up 3 percent in the quarter. Average transaction value inched up 1 percent while the number of transactions increased 3 percent.

Kay and Jared stores held a lot of clearance sales in the third quarter, which ultimately impacted gross margin, though Chief Financial Officer Joan Hilson noted on the call, “Underneath that, we are pleased by the performance of new product.”

Signet’s total GAAP gross margin was $367.7 million, or 31 percent of sales, down 20 basis points year-over-year.

The retailer’s top performer in the third quarter was James Allen, which posted a 16 percent sales increase, followed by Piercing Pagoda at 12 percent.

CEO Gina Drosos said Q3 marked Piercing Pagoda’s sixth consecutive quarter of double-digit growth.

In addition, the ear piercing chain opened 11 new kiosks in “top-performing malls” in the period and launched its first advertising campaign.

Kay Jewelers saw same-store sales increase 4 percent, with the “Center of Me” collection, a line of Hallmark-branded jewelry, and Adrianna Papell bridal among the top sellers.

Comps at Zales were up 3 percent, due in part to the new Marilyn Monroe collection as well as the Disney-licensed “Frozen 2” and “Maleficent” lines.

Jared the Galleria of Jewelry (down 3 percent), Canadian chain Peoples (down 4 percent) and regional banners (down 16 percent) all posted same-store sales declines.

On Thursday’s call, Drosos said Signet has improved the effectiveness of its advertising spend, particularly by using data analytics to target customers online, and adopted a “mobile-first” approach to online advertising.

RELATED CONTENT: Mobile Shopping Emerges as an Early Holiday Winner

She