Signet Jewelers Ltd., reporting a big lift in third-quarter sales and profits, has momentum riding into the heart of the holiday season but expressed uncertainties due to COVID-19.
Net income totaled $83.9 million, or $1.45 a share, in the quarter ended Oct. 30, up from $900,000, or 2 cents a share, from last year’s quarter.
Operating income reached $106.9 million, up $39.7 million from the year-ago quarter, and up from a loss of $39.9 million in the third quarter of 2019.
Total sales were $1.5 billion, an increase of more than $235 million compared to the same period in 2020 and nearly $350 million versus 2019. Total comparable sales rose 18.9 percent from a year ago, and 37.2 percent compared to the 2019 quarter.
Signet raised its revenue outlook for the year to $7.41 billion to $7.49 billion from $7.04 billion to $7.19 billion previously, and its operating income outlook for the year to $777 million to $814 million, from a previous forecast of $680 million to $735 million.
Same-store sales are seen growing 43 percent now from a previous outlook of 35 to 38 percent.
“While uncertainties remain in the macro environment, our strategies are working as evidenced by strong conversion rates and higher average transaction value,” Signet chief executive officer Virginia C. Drosos said in a statement.
“We have built a healthy operating structure enabling transformative investments that are attracting new customers and driving loyalty,” Drosos said. “Our data-driven customer insights and planning helped us secure earlier receipt of our holiday assortment and ensure no significant disruptions to our supply chain or labor needs.”
Recently, jewelry has been a top-selling category at stores, due to earlier holiday gift selling, and people starting to go out and dress up for special occasions again, including weddings.
“We had the strongest third quarter in our company’s history. We are so encouraged by the momentum we are getting. There’s a tremendous desire from customers to return to stores and shop face-to-face,” Jamie Singleton, president of the Kay, Zales and Peoples divisions, and chief marketing officer for the corporation, told WWD in an interview.
“They’re shopping online and coming in stores to try on product and for fulfillment,” Singleton said. “We raised our guidance. We are optimistic. We are going to continue to see strength in our business.
“One big advantage is our supply chain. In retailing, there are tremendous pressures, but we got ahead of this supply chain issue early in the year. We have an amazing vendor network. Our in stock rates are at record highs for this time of year. Our supply chain is going to give us tremendous advantage as we head into the last weeks of the holiday business and we have been using data and analytics to get out in front of the costumer shifts.”
Signet, considered the world’s largest retailer of diamonds, gets most of its diamond jewelry from India, Italy and Thailand, Singleton noted. “We started looking hard on our reliance on China and the Far East, and had our vendors build redundant capabilities in different countries including some in the U.S.”
Signet also regularly uses air freight, and jewelry is comparatively less expensive than other categories to ship since it’s smaller and more gets packed in a box.
E-commerce sales were $273.1 million, up 14.4 percent compared to last year’s quarter and 96.1 percent compared to the 2019 quarter.
Brick-and-mortar same-store sales were up 20.3 percent last year, and 28.8 percent compared to the third quarter of 2019.
The strong results were also attributed to “transformative investments” including the purchase of Diamonds Direct, the Rocksbox jewelry rental and resale website, and JamesAllen.com four years ago. Singleton also cited investments in digital capabilities, data and analytics capability, product development and employee training.
Additionally, “structural business model changes” were cited, including earlier planning to pull more business into the third quarter. “Christmas began in August and September, not December,” Singleton said. She also cited sharper differentiation in the merchandising and marketing of each division.
Asked what’s selling best lately, Singleton said, “We are continuing to see the engagement ring business shift to larger, higher-quality stones. The men’s business is incredible. Men are self-purchasing and women are gifting jewelry to men. That’s a very different pattern from the past. We are also seeing customers personalize more than in the past.
In light of spiking COVID-19 cases and the spread of the Omicron variant, “There are some uncertainties as it relates to COVID-19 and the variant. We are seeing are customer in stores, but we are preparing for customers not wanting to be in crowded physical environments,” such as by making easier for curbside jewelry pickups. “We are really trying to anticipate every possible impact.”