The holiday season didn’t sparkle quite so bright for Signet diamonds.
Signet Jewelers Ltd., which includes jewelry brands such as Kay Jewelers, Zales, Jared and Piercing Pagoda, released its holiday sales report for the nine weeks ending Jan. 5, 2019, on Thursday, with disappointing same-store sales and a dimmer outlook.
Same-store sales fell 1.3 percent during the period. The company also updated both its fourth-quarter guidance and full 2019 sale guidance. This quarter, Signet anticipates a lower sales figure, while full-year sales are expected to be flat.
“Our holiday season performance fell short of our expectations,” Virginia Drosos, chief executive officer of Signet, said in a statement. “These holiday results reinforce the need to take even faster action to improve our financial and operational performance.”
There are several downfalls, including less consumer interest in legacy jewelry brands with big clunky stones like Le Vian. Drosos also said more promotional sales across the industry caused increased competition and traffic to dwindle. And some of those sales, like anniversary shopping in particular, didn’t seem to do much to lure customers into stores.
In fact, most of Signet’s gains were from its Piercing Pagoda and Zales businesses. Same-store sales at Piercing Pagoda jumped 16.9 percent, while Zales grew 2.9 percent during the holiday period. Meanwhile, Jared was hit the hardest, down 8 percent, Kay Jewelers fell 0.8 percent and James Allen declined 0.2 percent.
“We will move decisively to improve profitability through aggressively optimizing our cost structure and continuing to right-size our store base, as well as more effectively managing our inventory,” Drosos said in the statement. “As we enter the second year of our Path to Brilliance transformation, we expect to accelerate initiatives to enhance our product assortment, marketing personalization and analytics, promotional effectiveness, service offerings and e-commerce to deliver a more seamless and engaging omnichannel customer experience.”
But investors may not be sold. The stock took a nosedive Thursday, closing 24.73 percent down to $25.11. Even worse, in the last year, the stock has dipped 53.2 percent.
“Given the disappointing holiday results in light of a better overall macro trend, our expectation [is] for a worsening trend in January,” Brian Tunick, an analyst at RBC Capital Markets, wrote in a recent note to investors. “A return to share gains at [Signet] is likely to remain a choppy road, and that the company still hasn’t gotten a full handle on credit outsourcing despite several quarters into the process.”
The company was also recently embroiled in legal troubles and order to pay fines in the amount of $11 million to New York regulators for allegedly signing up customers for store credit cards without their permission.
In a filing with the U.S. Securities and Exchange Commission on Wednesday, Signet said it has been cooperating with investigations by the Bureau of Consumer Financial Protection and Attorney General for the State of New York “without admitting or denying any of the allegations,” and would recognize the related $11 million pre-tax charge in the fourth quarter ending Feb. 2.
But there were a few splashes of glimmer for the jeweler this holiday, like e-commerce sales, which rose 5.6 percent year-over-year in North America. The season was also positive for engagement rings and fashion jewelry collections, such as Vera Wang Love, Neil Lane and Kay’s Love + Be Loved collection.