Signet Jewelers registered lower comps but higher-than-expected profits in the first quarter of fiscal 2020 (ended May 4).
Except for Piercing Pagoda, where same-store sales soared 13.5%, comps dropped at every Signet banner, including Kay (down 1.4%), Zales (1.4%), Jared (2%), e-tailer James Allen (2.4%), Canadian chain Peoples (4.9%), and its U.K. stores (5.2%).
Overall same-store sales dropped 1.3% in the quarter, though e-commerce sales rose 5.3%. Total revenue for the quarter was $1.43 billion.
On a conference call following the release of its financial results, Signet chief executive officer Gina Drosos said that the company saw mall traffic soften in May.
E-commerce now accounts for 10.8% of the company’s sales, up from 9.9% the year before. James Allen’s sales will likely continue to be affected as more states institute online sales tax, Drosos said.
Net cash from operating activities totaled $105.4 million, an increase of $77.5 million versus last year’s first quarter. On a GAAP basis, the company posted a $2.6 million loss for the quarter, compared to a $574.2 million loss the year before.
Signet’s flagship brands performed well, including the Enchanted Disney Fine Jewelry collection (particularly its new Aladdin line), Vera Wang Love collection, Neil Lane collection, and Leo Diamond. However, legacy collections such as Ever Us and non-branded bridal registered declining sales.
Fashion sales increased, led by on-trend collections like gold fashion jewelry, Disney fashion jewelry, and the Love + Be Loved collection.
“That represents our strategy to grow gifting, especially in non-holiday occasions, as well as female self-purchases,” Drosos said. She added that Love + Be Loved “has potential to grow into a meaningful proprietary fashion brand with several designs selling out after the marketing campaign began.”
Signet is also introducing more men’s-oriented jewelry.
However, legacy fashion collections such as Le Vian dropped. Watch sales declined, as did sales of Pandora.
Its SEC filing said the imposition of tariffs on Chinese goods could have a “material effect” on the company’s results, requiring it either to raise prices or decrease margins.
On the conference call, Drosos said that 30% of the company’s products come from China, and that the company was looking at diversifying its sourcing.
The company still plans to close around 150 stores over the coming fiscal year and to realize in $70 million–$80 million net savings this year.
Signet’s full quarterly report can be seen here.
(Image courtesy of Signet Jewelers)
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