Signet Jewelers Ltd.’s stock hovered near all-time lows after the retailer revealed a drop in holiday sales.
Total sales during the nine weeks ended Dec. 30 fell to $1.88 billion, a decrease of $59.2 million or 3.1 percent from a year earlier, while same-store sales declined 5.3 percent. Sterling’s stock slipped 7 percent to $52.62 during morning trading, a monthly low and one of the lowest rates for the company since 2012.
Signet said declines were “driven by weakness” in Sterling and Kay stores and an ongoing transition of its credit outsourcing, “which accounted for approximately two-thirds of the decrease.”
Last year, the company said it was selling $1 billion in prime account receivables, or 55 percent of its credit portfolio, to Alliance Data Systems. The deal was closed in October the complete outsourcing of the business was to follow.
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Signet said holiday sales in other segments were positive, particularly e-commerce, which jumped to $210.5 million, an increase of 47.7 percent over last year. Sales at Zales, which is not being affected from the credit outsourcing, also ticked up 2.2 percent to $401.5 million, aided by bridal.
Virginia Drosos, Signet’s new chief executive officer, said the company “made positive progress on our strategic priorities,” like bringing in more new product and doing more targeted promotions.
“Additionally, our efforts to enhance our digital presence and omnichannel capabilities drove strong customer engagement and marketing efficiencies,” Drosos said. “We are resolutely focused on addressing credit transition issues in our Sterling division to return to growth there as well.”
Drosos took up the top executive position at Signet earlier this year, after former ceo Mark Light left the company for “health reasons” in the wake of his implication in a sprawling gender discrimination class action suit that includes detailed accounts of sexual harassment. The case is currently being arbitrated and the allegations only became public this year.
Even before details of the suit became public, Signet had been struggling with steady declines in sales and profits and related dips in its stock price.
Nevertheless, Signet upped its full-year earnings guidance to reflect the expectation that its effective tax rate will fall to around 15 percent from 22 percent with the tax reform bill pushed through by the Trump administration. The bill will see corporate taxes reduced to their lowest level in 80 years and it includes a number of rate reductions for wealthy individuals and large real estate holders, while removing tax credits for individual mortgages. Some average Americans and small business will also see taxes reduced under the bill, but those are set to expire after eight years.
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