Despite lower second-quarter sales, Signet Jewelers Ltd. boosted profits 40.1 percent with cost cuts totaling $56.6 million.
This story first appeared in the September 18, 2009 issue of WWD. Subscribe Today.
The Bermuda-based parent of Kay Jewelers and Jared The Galleria of Jewelry said earnings for the quarter ended Aug. 1 grew to $27.6 million, or 32 cents a share, from $19.7 million, or 23 cents, a year earlier. Sales slid 7.6 percent to $710.8 million from $768.9 million. Comparable-store sales fell 5.3 percent.
Selling, general and administrative expenses were reduced $26.1 million while cost of goods sold was cut $30.5 million.
Terry Burman, chief executive officer of the 1,952-unit chain, said on a conference call with analysts that an estimated 1,800 jewelry stores closed in the U.S. last year, paring back space in the sector by about 8 percent. Another 750 to 1,500 stores are expected to go dark this year. The ceo said his own company would cut its U.S. net square footage by about 2 percent this year and another 1 percent to 2 percent next year.
“Many of those competitors who remain in business continue to weaken and they are forced to make draconian cuts to expenses and inventory,” Burman said.
“We are taking advantage of the reduction in sector capacity that is taking place to gain market share,” he said.
For the first half, Signet’s earnings increased 18.7 percent to $53.9 million, or 63 cents a share, as sales fell 7.4 percent to $1.47 billion and were off 4 percent on a comp basis.
In another development, jeweler Zale Corp. last week delayed for the second time the release of its fourth-quarter results as the company completed a review of its accounting for prepaid advertising costs. No new date has been set. Zale said it needed to make about $13 million in pretax accounting adjustments to results dating to before 2000.