UPDATE, SIGNET RESPONDS; Report: Signet Jewelers’ Two Largest Retailers Accused Of Widespread Sexual Harassment, Discrimination

Bombshell may be the proper word to describe Monday’s story in The Washington Post regarding Kay Jewelers and Jared The Galleria of Jewelry. Devastating may be the proper adjective. 

Since 2008 there’s been an ongoing arbitration case between Sterling Jewelers (which is the parent division of Kay and Jared), by former female employees of the company who allege they were victims of sexual harassment and discrimination, dating back to the 1990s. It began with about a dozen former employees. It has now grown to approximately 69,000 men and women employed at the two jewelry chains, according to the Post.

Update: Signet Jewelers (the parent company of Sterling Jewelers) just issued a response to what it terms “distorted and inaccurate media reports.”

It reads in part, “It's critical to understand that an arbitration claim was brought against Sterling in 2008 that alleged gender discrimination in pay and promotion. None of the 69,000 class members have brought legal claims in this arbitration for sexual harassment or sexual impropriety. Since its filing, it has never included legal claims of sexual harassment or hostile work environment discrimination. The only claims certified to proceed on a class wide basis relate to alleged gender pay and promotions discrimination. Despite years of litigation, millions of pages of documentation and numerous depositions, claimants' counsel have chosen not to file sexual harassment claims. These allegations publicized by claimants' counsel and reported in the media create a distorted, negative image of the company.” 

The full statement is at the end of the story

Over the years I remember this case appearing in public every so often and then disappearing again. Under arbitration rules, there is little transparency. So knowing the extent of what is being alleged was difficult to determine. 

Now we know and it isn’t pretty. 

More than 1,300 pages of sworn statements were released Sunday due to requests from the Post and lawyers representing the employees. Names of the executives being accused were redacted under the agreement to release the documents. However, through memorandums one of the executives was identified: Mark Light, now CEO of Sterling’s parent company, Signet Jewelers. He is among those accused of “having sex with female employees and promoting women based upon how they responded to sexual demands,” the Post reports. 

Most damning is this: “Multiple witnesses told attorneys that they saw Light ‘being entertained’ as he watched and joined nude and partially undressed female employees in a swimming pool,” according to the 2013 memorandum.”

About 250 women and men who worked at Sterling “allege that female employees at the company throughout the late 1990s and 2000s were routinely groped, demeaned and urged to sexually cater to their bosses to stay employed,” according to the Post. “Sterling disputes the allegations.” 

The others accuse the company of discriminatory practices in regards to pay and promotion. 

Many of the most striking allegations, according to the Post, stem from the company’s annual managers meetings, “which former employees described as a boozy, no-spouses-allowed ‘sex-fest’ where attendance was mandatory and women were aggressively pursued, grabbed and harassed.”

The Post backs the testimony with interviews of a few of the accusers. 

Signet Jewelers, as previously mentioned, is the parent company of Sterling Jewelers, which consists of Kay, Jared (two chains in this legal battle) and regional jewelry store chains. Signet is one of the two largest jewelry retailers in the world (depending on how it’s determined). It has operations in the U.S., Canada, Puerto Rico and the U.K. In 2014, Signet acquired Zales Jewelers. 

Signet’s sales were approximately $6.5 billion, according to its fiscal 2016 financial report. Kay and Jared make up about 58 percent of total sales. 

This is not only a public relations nightmare but it also has potential to have a devastating effect on Signet's balance sheet. Company sales have already struggled this year.

Signet scheduled its fiscal 2017 and fourth earnings release and conference call for March 9. This should be some presentation. 

In case you haven’t clicked on the link yet here it is again. 

Signet's statement:

Sterling Jewelers Statement on Ongoing Arbitration
Misleading media reports mischaracterize arbitration

Akron, Ohio, Feb. 28 - In response to the distorted and inaccurate media reports, Sterling Jewelers released the following statement:

It's critical to understand that an arbitration claim was brought against Sterling in 2008 that alleged gender discrimination in pay and promotion. None of the 69,000 class members have brought legal claims in this arbitration for sexual harassment or sexual impropriety. Since its filing, it has never included legal claims of sexual harassment or hostile work environment discrimination. The only claims certified to proceed on a class wide basis relate to alleged gender pay and promotions discrimination. Despite years of litigation, millions of pages of documentation and numerous depositions, claimants' counsel have chosen not to file sexual harassment claims. These allegations publicized by claimants' counsel and reported in the media create a distorted, negative image of the company.

Indeed, the distorted and inaccurate picture of our company presented in these allegations does not represent who we are. They involve a very small number of individuals in a workforce of more than 84,000 during the class period, and many allegations go back decades. The company takes any concerns seriously and had - and continues to have - multiple processes in place to receive and investigate allegations of misconduct. We continue to encourage all employees to use these processes to raise any workplace concerns so we can investigate and take appropriate action.

Regarding the alleged gender discrimination in pay and promotion allegations, our company is guided by our core values of fairness, opportunity, integrity and respect and has created strong career opportunities for many thousands of women working at our stores nationwide. As a result of our employment and advancement programs, as well as our culture, more than 68 percent of all our store management staff are female, and female participation in management positions continues to grow.

Because of our long-term commitment to equal opportunity, we have taken the allegations of pay and promotions discrimination raised in this case very seriously. We have thoroughly investigated the allegations and have concluded they are not substantiated by the facts and certainly do not reflect our culture.

Source: Signet Jewelers

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Luxury Shoppers Drive Jewelry Sales

Just in time for the largest jewelry show in the U.S. to begin, luxury-jewelry retailer Tiffany & Co. said Thursday that its first-quarter profit more than doubled, with the return of high-end shoppers, MarketWatch reports.

Net income for the New York-based company surged to $64.4 million, from $24.3 million. Sales in the quarter rose 22 percent to $633.6 million. Comparable-store sales rose 10 percent.

Statement pieces over $50,000 rose for the second time in more than a year and saw the biggest percentage increase in jewelry, executives said on a conference call, the company said. Engagement pieces also rose for the second time in at least a year, helped by pent-up demand, while comparable sales in the company's top market U.S. increased for the second straight quarter after declining the past two years.

This piece of good news comes at a time when JCK shows in Las Vegas are set to begin, with Luxury by JCK (June 1-3), Swiss Watch by JCK (June 3-7) and JCK Las Vegas (June 4-7). Combined it is the largest jewelry show in the U.S. and one of the largest such shows in the world. Jewelry retailers in the U.S. use this event to buy product for the Christmas holiday season, the most important time of the year for these retailers.

A Tiffany spokesperson said the company will introduce a line of yellow diamond jewelry, expand the firm's watch business and will unveil a line of handbag and accessories this year. The company also is expanding its Internet sales and will launch its online business in Continental Europe this year.

Sales in the Americas increased a better-than-expected 22 percent to $315.3 million, compared with a 31 percent decline last year, MarketWatch reports. The number of transactions increased in all major product categories while traffic and average spending amount also were higher.

Jewelry retailer Signet Jewelers also saw its first-quarter profit nearly double, to $52 million year-over-year, according to The Street.

Signet revenue also rose 6 percent to $810 million, while same-store sales grew 5.8 percent. Sales at Signet's higher-end chain Jared The Galleria of Jewelry, jumped nearly 16 percent.

Even struggling Zale Corporation said on Wednesday that it narrow its third-quarter loss as margins improved and it was boosted by a tax benefit.

During the quarter, the more moderately priced jeweler lost $12.1 million compared with a loss of $19.5 million, year-over-year. Excluding the tax gain, Zale’s loss was much steeper.

Zale revenue declined 5 percent to $359.8 million, after the company shut down its supply chain in December in an effort to preserve liquidity, The Street reports. Zale did, however, see more items being sold at full price.