Signet Jewelers Ltd. reported fourth-quarter earnings and sales that beat expectations even as both fell over the year.
The owner of Zales, Kay, Piercing Pagoda, and other brands is in the midst of a three-year turnaround plan, called “Path to Brilliance,” that includes cutting costs. As part of the plan, Signet closed 262 stores in its recently completed fiscal year. It expects to close more than 150 locations this year, with limited new store openings primarily consisting of repositions to off-mall locations. By the end of its current fiscal year, the retailer will have reduced its store base by 13% over a three-year period.
On the company’s quarterly conference call with analysts, CEO Virginia Drosos said Signet is focusing on “fewer, better stores.”
Signet swung to a net loss of $116.2 million, or $2.25 a share, in the quarter ended Feb. 2, from a profit of $343.0 million, or $5.24 a share, in the year-ago period. Adjusted earnings per share were $3.96, above Street estimates of $3.81.
Total sales declined 6% to $2.15 billion but topped estimates of $2.14 billion. Same-store sales in North America fell 1.4%. By brand, same-store sales increased 17.1% at Piercing Pagoda and 2.0% at Zales. Kay’s same-store sales decreased 1.6%, and Jared sales decreased 8.4%. James Allen sales declined 1.4%.
For the full year, Signet lost $12.62 per share. Revenue inched down 0.1% to $6.2 billion.
“While pleased with the company's "Path to Brilliance" strategy of cutting costs and boosting marketing efforts, we did not finish the year as strongly as expected due to a highly competitive promotional environment, continued consumer weakness in the U.K., and lower than expected customer demand for legacy merchandise collections that impacted our holiday fourth quarter results," stated Drosos.
On the call with analysts, Drosos said that upcoming initiatives will include adding more exclusive pieces and customized items, both in store and online, along with full-service offerings, such as repairs and piercings.
Signet operates approximately 3,300 stores primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples, Piercing Pagoda, and JamesAllen.com.