Embattled Signet Jewelers CEO, Mark Light, Resigns Due To ‘Health Reasons’

Signet Jewelers new CEO, Virginia “Gina” C. Drosos

Signet Jewelers Ltd., the world’s largest retailer of diamond jewelry, has named Virginia “Gina” C. Drosos as its new CEO, effective August 1. She will replace Mark Light, who served as CEO since October 2014. 

Light, who has been an executive at Signet for more than 35 years, is retiring due to “health reasons,” according to a company statement. 

Light has been struggling with allegations that stem from a class-action arbitration case dating back to 2008, alleging years of systemic, mass sexual harassment; and gender discrimination in pay and promotion. The case, which has now grown to 69,000 employees with these allegations dating back to the 1990s, was made public in February in a long, detailed Washington Post story that included interviews with some of the victims. 

Light was identified in the story, which reads in part: “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.”

The company denied the allegations at the time calling the Post story and subsequent press stories that followed, “distorted and inaccurate.” It reads in part: “(The) 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.”

At the time Light was head of Signet’s largest U.S. division, Sterling Jewelers, which includes the jewelry chain stores, Kay, Jared The Galleria of Jewelry and regional brands. This division currently makes up approximately 58 percent of Signet’s total sales.

“Given the company’s positive direction and my need to address some health issues, the board and I agreed that it is a good time for a transition,” Light said in a statement.

Drosos, a former beauty and consumer goods executive, has served as an independent director of the company’s board since 2012. She has nearly 30 years of executive leadership experience and previously served as president & CEO of Assurex Health and as a group president of Global Beauty Care at The Procter & Gamble Company. 

“She is a visionary and transformational leader with a proven track record of growing and scaling global businesses through winning strategies and innovation,” Stitzer said. “Gina’s experience brings a unique combination of demonstrated brand building, given her strong background in beauty, along with the creativity, flexibility and boldness of an entrepreneurial mindset. She also possesses a strong financial background, having managed multibillion dollar P&Ls through phases of high growth, while delivering cost reductions and operational efficiencies. As a member of the board since 2012, she is deeply familiar with Signet’s strategic vision.”

Drosos joined Signet’s Board of Directors in 2012, serving on the Compensation and Nomination and Corporate Governance committees. She is a member of the Board’s Customer Experience sub-committee focused on “OmniChannel” strategy and winning in fashion jewelry, as well as the board’s “Respect in the Workforce” committee focused on programs and policies to support the advancement and development of employees. 

Signet operates approximately 3,600 stores in the U.S., Canada and the U.K., primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples and Piercing Pagoda. 

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Tiffany And Signet Report Declines In Second Quarter Sales

Two of the most important jewelers in North America report a decline in total sales and comparable store sales during the second quarter of 2016.

Tiffany & Co.
The luxury retail jeweler said worldwide net sales for the second quarter fell 6 percent to $932 million and comparable store sales dropped 8 percent, year-over-year. Exchange rates seemed to have little effect on the global declines, with the exception of Japan. On a constant-exchange-rate basis, worldwide net sales and comparable store sales declined 6 percent and 9 percent, respectively.

Sales declines were reported throughout all of its regions, with the exception of Japan. The company, which operates 311 stores around the world, attributes the drop in sales to decreased activity from local customers and foreign tourists.

The latest quarter brings worldwide net sales to $1.8 billion for the first half of the year—7 percent below the first half of the prior year and comparable store sales declined 9 percent. On a constant-exchange-rate basis, worldwide net sales and comparable store sales declined 6 percent and 9 percent, respectively.

“The global environment continues to reflect well known challenges that we believe have had broad effects on spending by local customers, as well as foreign tourists, especially from China,” said Frederic Cumenal, Tiffany & Co. CEO. “We are managing expenses efficiently, but also maintaining our marketing spending as a percentage of sales and continuing to invest in key strategic initiatives and opportunities to further strengthen Tiffany's competitive position among global luxury brands.”

Net sales by region are as follows:

In the Americas, total sales of $434 million in the second quarter and $837 million in the first half were both 9 percent below last year, with declines of 9 percent and 10 percent, respectively, in comparable store sales. On a constant-exchange-rate basis, total sales and comparable store sales declined 8 percent and 9 percent, respectively, in both the second quarter and first half. Tiffany attributed the declines to lower spending by U.S. customers as well as by Chinese and other foreign tourists.

In the Asia-Pacific region, total sales of $230 million in the second quarter and $469 million in the first half were down 6 percent and 7 percent, respectively, lower than the prior year, and comparable store sales declined 12 percent and 13 percent, respectively. On a constant-exchange-rate basis, total sales and comparable store sales declined 3 percent and 9 percent, respectively, in the second quarter and 4 percent and 11 percent, respectively, in the first half. Sales growth in China and Korea was offset by a continuation of significant declines in Hong Kong and more moderate declines in most other markets.

In Japan, total sales increased 10 percent to $138 million in the second quarter and rose 9 percent to $269 million in the first half. Comparable store sales increased of 13 percent and 12 percent, respectively. However, on a constant-exchange-rate basis, total sales and comparable store sales declined 5 percent and 3 percent, respectively, in the second quarter and declined 2 percent and rose 1 percent, respectively, in the first half. Management noted lower spending by Chinese tourists in both periods.

In Europe, total sales declined 12 percent to $111 million in the second quarter and 11 percent to $208 million in the first half of 2016. Comparable store sales fell 17 percent and 16 percent for the period. On a constant-exchange-rate basis, total sales and comparable store sales declined 8 percent and 13 percent, respectively, in the second quarter and 7 percent and 13 percent, respectively, in the first half. Lower sales in continental Europe were attributed to weak demand by foreign tourists and local customers, in contrast to better performance in the UK.

Other sales declined 3 percent to $18 million in the second quarter and 20 percent to $40 million in the first half, reflecting comparable store sales declines of 22 percent and 21 percent, respectively. Management noted lower retail sales in the United Arab Emirates and an increase in wholesale sales of diamonds.

Signet Jewelers
The dominate retail jeweler in the U.S., Canada and the U.K. reported a year-over-year sales decline of 2.6 percent to $1.37 billion. Total sales on a constant currency basis declined 1.3 percent. Comparable store sales decreased 2.3 percent compared to an increase of 4.2 percent in the second quarter of the prior year.

The company said “the decline was fairly broad-based across most store banners and merchandise categories and was particularly pronounced in energy-producing regions.”

“We are disappointed by our Q2 results and market conditions have been challenging particularly in the energy-dependent regions,” added Mark Light, Signet Jewelers CEO. “We achieved some important wins in the second quarter. Select diamond fashion jewelry, bracelets, and earrings sold well. We saw success in a variety of selling channels including outlets, kiosks, and on-line due to improvements in our consumer websites and mobile sites. The Zale integration is running well and synergies remain on target. We remain confident in the medium and long-term prospects of our business.”

Signet Jewelers second quarter sales by operating segment is as follows:

• The Sterling Jewelers division (which consists of U.S. retail chains Kay, Jared and regional US brands) saw comparable store sales fall 3.1 percent with the average transaction value down 0.8 percent. The company attributed this to “relatively stronger sales of several fashion and diamond jewelry collections as compared to higher-priced bridal jewelry.” The number of transactions decreased 3 percent. 

• Zale Jewelry division (which includes Zale and Gordon stores in the US, Canada and Puerto Rico along with Peoples Mappins stores in Canada) saw same store sales decrease by 3 percent. ATV increased 1.2 percent “driven by higher sales of select diamond jewelry collections,” the company said. The number of transactions decreased 4 percent.

• Piercing Pagoda's same store sales increased 6.4 percent. ATV increased 17 percent while the number of transactions decreased 7.7 percent. The higher sales “were driven principally by strong sales of gold chains and diamond jewelry. Transactions declined primarily due to fewer piercings.”

• In the UK Jewelry division (which consists of H.Samuel and Ernest Jones) same store sales increased 0.8 percent. ATV increased 2.5 percent “driven principally by strong sales of diamond jewelry and prestige watches,” while the number of transactions decreased 3 percent due to lower sales in fashion watches, the company said. 
Ecommerce sales, which have seen robust growth in recent years, continued this path in the second quarter with a 5.6 percent increase to $69.6 million. This total accounts for 5.1 percent of total sales for the period. 

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Signet Jewelers Sales Up 3.2%, Comps Up 2.4% in First Quarter

Signet Jewelers dominance of the U.S. jewelry market is undeniable. It is by far the largest and most diverse fine jewelry retailer in the U.S. To add to its U.S. success, the company also is the largest jewelry retailer in Canada and the U.K., with more than 3,600 stores in the three countries. 

However, it is in the U.S. where its dominance is the most formidable where it operates the three leading brands in various market categories:

* Kay Jewelers, which serves the mid market and is the largest specialty retail jewelry store in the US based on sales with more than 1,000 stores in 50 states;

* Zales, diamond jewelry specialists with more than 700 U.S. stores and 10 stores in Puerto Rico; and 

* Jared The Galleria Of Jewelry, upper-middle market jewelry retailer with more than 250 free-standing stores in 39 states. 

Signet’s strength was reinforced Thursday as the company reported that sales rose 3.2 percent to $1.58 billion and comparable store sales increased 2.4 percent, year-over-year, for the first quarter of fiscal 2017. More importantly for shareholders the company said diluted earnings per share grew a remarkable 26.4 percent and adjusted EPS grew an equally impressive 20.4 percent for the same period.

Signets results followed a disappointing earnings report from Tiffany & Co. a day earlier where the luxury jeweler saw total sales in the Americas fall by 9 percent to $403 million and comparable store sales declined 10 percent, year-over-year.

Mark Light, Signet Jewelers CEO, credits its promotions, tight operating margins and real estate management for the solid sales and earnings results at a time when the U.S. jewelry industry on the macro level continues to be choppy. 

“We gained profitable market share despite a challenging retail environment through strong sales of ‘Ever Us’ and other fashion jewelry collections as well as select branded bridal,” Light said. “Our 26 percent EPS growth was driven by higher same store sales and total sales along with solid expense management and synergies, leading to 190 basis points of operating margin expansion. In addition to delivering earnings results at the top end of our guided range, we achieved sales growth across real estate formats and in each of our divisions and our credit metrics showed strong sequential improvement.”

Signet’s dominant U.S. performance from its major brands hasn’t rubbed off on the handful of regional U.S. brands it owns and its Canadian operation. Its U.K. business showed improvement this quarter. Regardless, Signet's major U.S. brands account for approximately 83 percent of total sales for the company, so the drag from its smaller operations hasn’t had much of an effect on its bottom line. 

Other financial highlights for the first quarter of fiscal 2017 include: 

* Ecommerce sales increased 4.2 percent to $80.1 million, accounting for 5.1 percent of total sales. 

* Overall, average transaction value was higher and number of transactions was lower due to merchandise mix. 

* Comparable store sales for Sterling Jewelers (which includes Kay, Jared and regional brands) increased 2.3 percent, ATV increased 5.7 percent and the number of transactions decreased 5.6 percent. “This was driven principally by strong sales of select branded bridal jewelry as well as fashion jewelry and lower sales of Charmed Memories and low-priced promotional items, which tend to drive more transactions,” the company said. 

* Comparable store sales for Zale Jewelry (dominated primarily by Zales in the U.S. and several Canadian retail brands) increased 2 percent, ATV increased 5.8 percent, while the number of transactions decreased 3.7 percent. “This was driven primarily by strong sales of diamond fashion jewelry as well as branded bridal and lower sales of low-priced promotional items which tend to drive more transactions.” 

* Comparable store sales for Piercing Pagoda (its mall kiosk operation) increased 5.6 percent, ATV increased 13.7 percent, while the number of transactions decreased 6.9 percent. “The higher sales were driven principally by strong sales of gold chains and diamond jewelry. Transactions declined primarily due to fewer piercings.”

* Comparable store sales for Signet's UK jewelry operation increased 3.4 percent, ATV increased 4.3 percent and the number of transactions decreased 1 percent. “This was driven principally by strong sales of diamond jewelry and prestige watches. Transactions declined due primarily to beads and fashion watches.”

It has been two years since Signet closed the acquisition of Zale, its former biggest rival, and Light said the “integration continues to go extremely well across all aspects of our business. The synergies we expect to deliver this year will be mostly driven by operating expense savings as a result of the sound investments and strategic management of the integration over the past couple of years.”

He continued: “Learnings from our customer segmentation study and business results since the acquisition have validated our growth assumptions, and we have an enviable position with the three leading U.S. brands in a heavily fragmented and growing middle market jewelry industry.  We are pursuing the opportunity to grow square footage both near-term, driven principally by Kay, and medium-term driven more by Zales.” 

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Signet Jewelers Holiday Sales Up 5%, Same Store Sales Up 4.9%

Kay Jewelers, the largest specialty retail jewelry store in the US based on sales, posted a year-over-year 8.9 percent increase in sales to $778 million.

Signet Jewelers Limited said Thursday that year-over-year sales increased 5 percent to nearly $1.95 billion for the eight-week holiday period ended December 26. Total sales for the period at constant exchange rates increased 6.3 percent compared to the prior year.

Holiday same-store sales increased an equally impressive 4.9 percent compared to an increase of 3.6 percent in the prior year. This was driven primarily by mall-based and outlet concepts in the US as well as Ernest Jones stores in the UK, the company said.

Signet’s e-commerce sales for the holidays increased 10.9 percent to $139.7 million.

Signet bills itself as “the world's largest retailer of diamond jewelry” operating approximately 3,600 stores and eCommerce properties in the US, UK, Canada and Puerto Rico primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples and Piercing Pagoda.

Mark Light, Signet CEO, said in a statement the positive results “were driven by broad-based success across strategic store brands, merchandise categories and selling channels…. The continuation of strong sales and profitability combined with operating expenses that were in-line with expectations, including as-anticipated credit-related expense trends, enabled us to narrow our fourth quarter earnings guidance as well as our same store sales guidance to the top end of the previously provided guidance.”

In a conference call with investors this morning Light was particularly upbeat regarding its “Ever Us” two-diamond ring promotion that was used for several of the company’s brands, including Kay, Zale and Jared in the US, H.Samuels and Ernest Jones in the UK. Light said it was the biggest new launch in Signet’s history and did well in all the stores in the US and UK that carried the program.

“Most importantly, it crosses over gift giving categories and we are excited by that,” Light added.

Nearly all of Signet’s US properties did well during the holidays led by Kay Jewelers, the largest specialty retail jewelry store in the US based on sales, which posted a year-over-year 8.9 percent increase in sales to $778 million. Same store sales for the middle-market retail jeweler were 7.2 percent.

Zales US jewelry stores saw a 6 percent increase in sales to $400.2 million and a 5.6 percent growth in same store sales.

In the UK Ernest Jones same store sales increased 6.9 percent, while total sales were up 4.9 percent to $98 million (9 percent at constant exchange rates).

Only Signet’s Canadian operations suffered losses for the holiday season. Revenues in Canada and the UK were negatively impacted by exchanges rates.

Fourth quarter financial guidance was adjusted upward and is as follows:

* Same store Sales 4.6 percent to 5 percent
* Earnings per Share $3.44 to $3.50
* Adjusted Earnings per Share $3.54 to $3.60

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Signet Jewelers Q2 Sales Rise 15.1% With All National Store Brands Contributing

Signet Jewelers said Thursday second quarter sales in its US and UK stores increased 15.1 percent year-over-year to $1.41 billion. Same store sales increased 4.2 percent for the same period. 

The company’s eCommerce sales rose 30.5 percent to $65.9 million. Profit increased 7.2 percent to $62.2 million. 

The Bermuda-based company owns more than 3,600 retail locations, including Zale and Kay Jewelers brands in the U.S. as well as the Ernest Jones brand in the UK, said the sales increase “was driven by positive sales performance across all national store brands.” 

The company added that in the second quarter, an operational change related to the Sterling division’s extended service plans associated with ring sizing favorably impacted earnings. 

Second quarter sales by division are as follows:

* Sterling Jewelers division (which includes Kay Jewelers and Jared) reported that total sales increased 5.9 to $858.5 million. Same store sales increased 3.3 percent. Signet said sales increases “were broad-based across store banners, product brands and non-brands, as well as multi-channels. Bridal and diamond jewelry was particularly strong.” The average transaction price increased by 4.2 percent while the number of transactions decreased by 2.5 percent, due primarily to merchandise mix.

* Zale Division (a new Signet division that consists of former Zale Corp. brands, such as Zales, Piercing Pagoda stores in the US and Canada) saw its sales increase by 57.3 percent to 389.3 million. Same-store sales rose 5.8 percent for the period. 

* UK Jewelry division total sales declined by 2.3 percent to 159.1 million. The decreases were “driven entirely by foreign currency exchange rates,” Signet said. Same-store sales increased 5.1 percent. The average transaction price and number of transactions for the division increased by 4.3 percent and 1.8 percent, respectively, due to the merchandise mix. 

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Signet Jewelers CEO Mike Barnes Resigns; Replaced by Mark Light

Mike Barnes

Signet Jewelers Ltd. said Tuesday that Michael Barnes will resign from his position as chief executive officer and from Signet's board of directors, effective October 31, in order to be closer to his family in Dallas.

Mark Light, Signet's president and chief operating officer, has been named to succeed Barnes as CEO and take a seat on the board.

Signet said it is also reaffirming its financial guidance initiated in its second quarter earnings release on August 28.

Barnes joined Signet in December 2010 and became its CEO in January 2011, replacing Terry Burman, the company’s longtime CEO. Most recently he oversaw the $1.46 billion acquisition of Dallas-based Zale Corp., its largest US competitor, in May, making Signet the largest specialty jewelry retailer in the US, UK and Canada with approximately 3,500 retail outlets.

“Mike has been the leader of the Signet executive management team during a period of outstanding transformation and growth,” said Todd Stitzer, Signet chairman. “Since he joined Signet in 2010, Mike has been an instrumental part of Signet's success. He has played a critical role in Signet's recent acquisition of Zale Corp. and its continuing integration. He has also led the development of Signet's Vision 2020 Initiative for the future. We understand and respect his personal desire to relocate nearer to his family and pursue opportunities closer to his home in Dallas at this time.”

Signet is based in Bermuda and is listed on the NYSE. Its US subsidiary, Sterling Jewelers, with more than 1,400 stores in 50 states, is headquartered in Akron, Ohio. The company, in an SEC filing Tuesday, said it will pay Barnes accrued but unpaid benefits or obligations, his base salary for 12 additional months and an annual bonus at the end of the fiscal year.


Light has been with Signet for more than 30 years, with primary responsibility for the Sterling division, by far Sterling’s largest division, until the Zale Corp. acquisition.

“We are delighted to announce Mark’s promotion to chief executive officer of Signet,” Stitzer said. “Mark is an experienced, strategic leader who has been deeply involved in the company's Vision 2020 Strategy, the Zale acquisition and its ongoing integration. In addition he has a meticulous approach to operational details, and has been the main architect of our Sterling division's consistently profitable growth and has played a key role in defining and executing Signet's growth strategy. He has also been an advisor to our UK Managing Director since 2013 and became formally responsible for that business in mid-2014.”

Signet's Sterling division operates primarily under the brands of Kay Jewelers and Jared The Galleria Of Jewelry. Signet's UK division operates approximately 500 stores primarily under the name brands of H.Samuel and Ernest Jones. Signet's Zale division operates more than 1,600 locations in the US and Canada primarily under the name brands of Zales, People's, and Piercing Pagoda. The company also has online operations at www.kay.com, www.jared.com, www.hsamuel.co.uk, www.ernestjones.co.uk, www.zales.com, and www.peoplesjewellers.com.

Signet Jewelers To Acquire Zale Corp.

Mike Barnes, Signet CEO, will lead the combined companies.

In a surprise announcement two of the largest retailers in the US have agreed to become one company. 

Signet Jewelers Limited, the largest specialty retail jeweler in the US and the UK, and Zale Corporation, a leading specialty retailer of fine jewelry in North America, said Wednesday that they have entered into a definitive agreement for Signet to acquire all of the issued and outstanding stock of Zale for $21 per share in cash, or $690 million. Including debt, the deal values Zale at $1.4 billion. 

The transaction brings together two of today's leading jewelry retailers with six of the most recognizable brands across four countries. The combined company will have approximately 3,500 retail locations in the US, Canada, Puerto Rico and the UK with combined sales of $6.2 billion “and enhanced operating capabilities expected to generate approximately $100 million in annual synergies within three fiscal years,” the two companies said in a joint statement released Wednesday morning. 

Mike Barnes, Signet CEO  will hold the same position in the combined company, according to the statement. Theo Killion, Zale CEO, will continue to operate the Zale portion of the business and report to Barnes.

"This transformational acquisition further diversifies our businesses and extends our international footprint, opening the door to greater growth and innovation across the enterprise," Barnes said. "The addition of Zale to the Signet family is consistent with our long-term growth strategy and leverages our combined operating expertise to create better choices for our customers, new opportunities for our employees, and makes us a more attractive partner to our vendors. In addition, it allows us to better optimize our balance sheet, creating long-term value for our shareholders. We are excited about the prospects for the combined company and the many opportunities that this creates for our future.”

Killion added, "Having successfully completed our multi-year turnaround program to return to profitability, Signet's operating strengths will enable us to accelerate Zale's performance improvement for the benefit of our current and future guests."

Signet's offer represents a premium of 41 percent over Zale's closing price as of February 18, according to the statement. It represents 7.4 times the EBITDA value over a 12-month period. As part of the transaction, Signet has entered into a voting and support agreement with Golden Gate Capital, the beneficial owner of approximately 22 percent of Zale's common stock. The transaction is expected to be high single-digit percentage accretive to earnings in the first full fiscal year after the close of the transaction, excluding acquisition accounting adjustments and one-time transaction costs.

The acquisition is expected to be financed through bank debt, other debt financing and the securitization of a significant portion of Signet's accounts receivable portfolio.

Signet has 1,400 retail locations that operate under the brands Kay Jewelers, Jared The Galleria Of Jewelry and regional brands. Signet's UK division operates approximately 500 stores primarily under the brands of H.Samuel and Ernest Jones.

Zale Corp. has 1,680 retail locations in the US, Canada and Puerto Rico. Its brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.

The transaction is subject to Zale stockholder approval, certain regulatory approvals and customary closing conditions.

J.P. Morgan Securities LLC acted as exclusive financial advisor and provided a fairness opinion to the board of directors of Signet and J.P. Morgan Chase Bank, N.A. committed to provide bridge financing for the transaction. Weil, Gotshal & Manges LLP acted as legal counsel to Signet in connection with the transaction. BofA Merrill Lynch acted as exclusive financial advisor and Cravath, Swaine & Moore LLP acted as legal counsel to Zale in connection with the transaction.

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Signet Jewelers Becomes Sponsor’s D.E.F. ‘Diamonds in the Sky’ Gala

Signet Jewelers Ltd., the largest specialty jewelry retailer in the US and UK, has become the first “Premier Presenting Sponsor” of the “Diamonds in the Sky” Gala Event, hosted by the Diamond Empowerment Fund (D.E.F).

The event will be held on May 29th at the Four Seasons Hotel in Las Vegas. D.E.F. is a global non-profit organization that raises money to fund education initiatives in diamond-producing nations. It was co-founded by business magnate Russell Simmons and leaders in the diamond industry in 2007. Signet Jewelers is best-known in the US as the owners of Kay Jewelers and Jared The Galleria Of Jewelry retail jewelry chains.

The event will bring a mix of the international diamond jewelry industry representatives, government officials from diamond producing nations, dignitaries and celebrities from fashion and entertainment. The proceeds will benefit D.E.F’s ‘Diamonds Do Good’ mission of providing higher education scholarships for youth from diamond producing countries. 

Presentation of the Diamond Empowerment Fund 2014 Global Diamond Industry Achievement Award will be made to Botswana President Ian Khama in recognition of their global leadership and contributions to democracy, sustainable economic development and the growth and expansion of the international diamond industry. 

“We are thrilled to congratulate Signet as the first Premier Presenting Sponsor for D.E.F on this occasion,” said Phyllis Bergman, president of D.E.F’s board of directors. “We encourage other industry leaders to consider sponsorship opportunities of this important event which celebrates the good diamonds do.” 

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2013 Holiday Sales Mostly Positive at Tiffany, Signet, Zale Corp.

The three largest jewelry retailers performed well enough during what was described as a challenging holiday sales period. 

Signet Jewelers, Tiffany & Co. and Zale Corp. experienced a November-December sales period that saw more competition for fewer shoppers. However, each company employed strategies that allowed them to make the most of the holiday season. 


Signet Jewelers
The largest specialty retailer in the US and UK, said that its US sales increased 7.9 percent year-over-year for the eight-week period ended December 28 to $1.07 billion. Same store sales for the period rose by 4.9 percent. However, the company did note that “additional discounting was necessary” in a competitive environment.

Sales at Kay Jewelers and Jared The Galleria Of Jewelry, its largest retail chains, rose 8.9 percent to $674.8 and 11.6 percent to $312.5 million, respectively, while sales at its regional brands fell 9.2 percent to $85.4 million.

Same store sales at Kay and Jared both increased 5.6 percent, while its regional brand holdings fell 2.3 percent for the period. 

“The US holiday season was highlighted by a strong November and a strong finish to December,” said Mike Barnes, Signet CEO. “However, additional discounting was necessary in a highly promotional retail environment that included challenging customer traffic trends and lower than anticipated commodity cost savings. We believe these factors will result in lower than expected gross margins and profitability versus our original expectations.”

In Signet’s UK division, which accounts for 19 percent of the company’s total revenues, sales for the eight-week holiday period increased 6.6 percent to $203.6 million year-over-year. Same store sales in the UK were up 5.2 percent.

Overall sales for Signet Jewelers In the eight-week period ended December 28, increased 7.7 percent to $1.27 billion. Same store sales increased 5 percent “driven by balanced strength across a variety of brands and categories.” 

Signet operates more than 1,400 stores in the US and 500 stores in the UK.

In addition, consolidated eCommerce sales increased 27.2 percent for the period, with a 24.8 percent increase in the US and a 37.5 percent increase in the UK.


Tiffany & Co.
The international luxury retail jeweler said Friday that total sales in the Americas region (which largely reflects US sales) rose 6 percent to $550 million for the holiday period ended December 31. On a constant-exchange-rate basis, total sales increased 7 percent while same store sales rose 7 percent due to what the company describes as “broad-based sales growth across most of the region.” The company operates 121 stores in the Americas.

The company reported that worldwide net sales for the period rose 4 percent to $1.03 billion. On a constant-exchange-rate basis worldwide net sales increased 8 percent due to growth in all regions. Same store sales increased 6 percent. 

“Tiffany enjoyed a good holiday season with overall sales results in line with our expectation, and we were pleased to see growth across our fine and statement, engagement and fashion jewelry categories,” said Michael J. Kowalski, Tiffany chairman and CEO.


Zale Corp.
Meanwhile, Zale Corp. reported same store sales for the holiday period increased 2 percent at constant exchange rates, or 0.7 percent on a US dollar reported basis led by a 3.5 percent rise in US same-store sales. 

Overall, the specialty retailer reported a 2 percent drop in holiday sales to $556 million, saying it is due to a closing of 91 stores during the year and a decline in the Canadian exchange rate. 

The Dallas-based company currently operates 1,064 fine jewelry stores and 630 kiosks in the United States, Canada and Puerto Rico, with the US being, by far, its largest market. 

The company’s US fine jewelry brands, consisting of Zales Jewelers, Zales Outlet and Gordon’s Jewelers, posted a same store sales increase of 3.5 percent. This increase follows a 2.2 percent rise in the same period last year.

Canadian fine jewelry brands, consisting of Peoples Jewellers and Mappins Jewellers, posted a same store sales increase of 0.5 percent at constant exchange rates, following a decline of 0.7 percent in the same period last year. On a US dollar reported basis, same store sales decreased 5.9 percent, following a 2.7 percent increase in the same period last year.

Piercing Pagoda, Zale Corp.’s kiosk jewelry business, posted a same store sales decline of 5.1 percent. In the same period last year, same store sales rose 1.7 percent.

“During the holiday period, we maintained our focus on increasing exclusive product penetration, driving gross margin improvement and building our core national brands,” said Theo Killion, Zale Corp. CEO. “We executed a solid holiday season despite a challenging retail environment.”

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US Sales Remain Strong At Signet Jewelers While UK Sales Disappoint

Signet Jewelers, the largest specialty retail jeweler in the US and the UK, said Thursday that second-quarter year-over-year sales increased 3.1 percent to $880.2 million. Same store sales for the period increased 3.6 percent year-over-year while eCommerce sales grew 7 percent to $31.2 million.

This was offset by a 1.2 percent decline in net income to $67.4 million. During a conference call Thursday, Mike Barnes, Signet CEO, said the decline was primarily due to the costs associated with the acquisition of the Ultra outlet jewelry store chain and the conversion of many of them to Zale Outlet stores, and lower gross margins compared to other Signet holdings. Without Ultra, earnings per share were up 5.9 percent.

In the company’s US division, which now accounts for nearly 85 percent of total sales for the company, sales increased 5.6 percent to $741.1 million. Same store sales increased 4.9 percent for the period. Sales increases were driven by strength in bridal, colored diamonds and watches. Signet owns 1,449 jewelry retail stores that operate under the brand-names Kay, Jared, Kay Outlet stores, Ultra and stores and some regional brands.

Kay and Jared experienced increases in both transaction counts and average transaction value. Meanwhile, eCommerce sales increased 36 percent to $25.3 million.

In the UK division, total sales declined 8.5 percent to $139.1 million in the second quarter. Same store sales decreased 2.4 percent. The company said the sales decline was primarily due to a same store sales decrease of $3.4 million, the impact of closed stores of $5.6 million and currency fluctuation of $3.9 million. Signet owns 500 retail stores that operate under the H.Samuel and Ernest Jones names.

The company said that at Ernest Jones, the number of transactions increased driven primarily by strength in branded bridal and watches, excluding Rolex, and the average transaction value was lower, primarily due to the impact from Rolex being offered in fewer stores. In H.Samuel, the number of transactions declined, primarily due to store closures and lower traffic. This resulted in lower sales across many merchandise categories, partly offset by strength in branded bridal products. Sales in both businesses were impacted by lower bead transactions. UK eCommerce sales in the UK increased 5.4 percent to $5.9 million, which include 45 percent coming to the websites through mobile devices, Barnes said.

Barnes noted during the conference call that Signet is in the process of updating its websites and mobile presence to take advantage of the increased traffic.

Other second quarter highlights:

* Gross margin declined, falling to $309.7 million or 35.2 percent of sales, compared to $311.2 million or 36.4 percent of sales in the second quarter fiscal 2013. The includes the results for Ultra increased gross margin dollars by $5.7 million; however, it reduced the consolidated gross margin rate by 50 basis points and the US gross margin rate by 70 basis points. The Ultra gross margin is lower than the core US business due to lower Ultra store productivity and the impact of the Ultra integration.

* Gross margin dollars in the US increased by $1.3 million compared to second quarter of fiscal 2013, reflecting higher sales offset by a gross margin decrease of 180 basis points. The company said the lower gross margin was primarily attributed to a gross merchandise margin decrease by 50 basis points, attributed to Ultra; and store occupancy and operating costs deleveraged by 70 basis points, of which 40 basis points was due to Ultra. The remaining 30 basis point change was due to the increase of new store openings.

* The US net bad debt ratio increased to 4.9 percent of sales compared to 4.5 percent of sales in prior year second quarter. The increase in the ratio was primarily due to the growth in the outstanding receivable balance. In addition, the US division experienced a “slight decline in collection efficiency” and a change in the credit mix. In the UK, gross margin dollars decreased $2.8 million, primarily reflecting the impact of decreased sales and currency fluctuation offset by a gross margin rate increase of 40 basis points.
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* Selling, general and administrative expenses increased 4.2 percent to $250.5 million. As a percentage of sales, SGA increased by 40 basis points to 28.5 percent. This includes the results for Ultra, which increased SGA by $13.5 million and increased the consolidated SGA rate by 70 basis points. The company said Ultra’s SGA is expected to decline as the final steps of the integration are completed.

* Operating income fell 4.9 percent to $105.5 million. Operating margin declined 100 basis points to 12 percent.

* The US division’s operating income including Ultra declined 4.9 percent to $111.5.

* Operating margin for the US division including Ultra was 15 percent, compared with 16.7 percent in fiscal 2013, down 170 basis points. Excluding Ultra, the US division’s operating income was $119.3 or 16.8 percent of sales, up 10 basis points.

In its guidance, the company said it expects same store sales to rise in the low-single digit for the third quarter.

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Signet Replaces CEO for UK Division

Signet Jewelers said Tuesday that Rob Anderson, CEO of Signet's UK division, will leave the company at the end of July. He will be replaced by Sebastian Hobbs who has been promoted to the new position of managing director for the UK division, effective immediately. Hobbs will report to Mike Barnes, Signet CEO.

The Bermuda-based company is the largest specialty retail jeweler in the US and UK with approximately 1,952 stores (1,449 in the US and 503 in the UK). Its retail chains in the US include Kay, Jared and Ultra Diamonds. In the UK, it owns and operates the H.Samuel and Ernest Jones jewelry chains.

“Seb has made important contributions to our UK division and we believe his experience in UK retailing and strategy make him a perfect fit for this role,” Barnes said.

Hobbs joined Signet's UK division as commercial director in March 2011. From November 2006 till March 2011, he was commercial director of Blacks Leisure Group. Prior to this, he was trading controller for WH Smith, a retail consultant for KPMG, and held management positions at Mothercare and British Home Stores.

Signet’s UK division has been struggling since the financial crisis. In its 2013 fiscal year, the division reported that sales fell 0.8 percent to $709.5 million. Same store sales increased 0.3 percent compared to an increase of 0.9 percent in Fiscal 2012. Sales performance was primarily attributed to lower traffic particularly in the fourth quarter.

By contrast, US division sales for the 2013 fiscal year increased 7.9 percent to $3.27 billion. Same store sales increased 4 percent for the year compared to an increase of 11.1 percent in Fiscal 2012.

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U.S. and E-Commerce Businesses Fuel 10.4% Jump in Signet’s Q1 Sales

Signet Jewelers Ltd., the largest specialty retail jeweler in the U.S. and the U.K., said first quarter sales increased 10.4% year-over-year to $993.6 million. Same store sales increased 6.4% compared to a rise of 1.2% for the same period in the previous year. E-Commerce sales rose 40.7% to $31.1 million.

Operating income increased 10.4% to $142.8 million and diluted earnings per share rose 17% to $1.13 for the company that owns the Kay, Jared and Ultra jewelry retail chains in the U.S. and the H.Samuel and Ernest Jones jewelry retail chains in the U.K.

The U.S. division, which accounts for approximately 86 percent of total company sales, again was the driver in the strong performance. Total U.S. sales increased 14.3% to $858.6 million. Same store sales increased 8.1% compared to an increase of 1.2% for the period. The increases were driven by broad based strength across all merchandise categories in their Kay and Jared jewelry chains, as well as its recent acquisition of the Ultra jewelry store chain. E-Commerce sales increased 48% to $25.6 million.

“We were very pleased with our results throughout the quarter, including Valentine’s Day and the run up to Mother’s Day,” said Mike Barnes, Signet CEO.

The UK division, which accounts for approximately 14 percent of total company sales, reported weak results. Total sales fell 9.1% to $135. Same store sales fell 2.3% compared to an increase of 1.2% in the first quarter Fiscal 2013. The company said the sales decline was due to a same store sales decrease of $3.1 million primarily in H.Samuel, the impact of closed stores of $4.8 million, and currency fluctuation of $5.6 million. In Ernest Jones, the number of transactions increased and there was strength in the bridal business and watches (excluding Rolex, which is being offered in fewer stores in the UK). In H.Samuel, the number of transactions declined, resulting in lower sales across most merchandise categories. E-Commerce was a bright spot, increasing 14.5% to $5.5 million.

In its guidance, Signet says it expects the shift of Mother’s Day sales this year partly into the first quarter to impact second quarter sales and earnings performance. In addition, integration costs and the seasonality of the company’s newly acquired Ultra Stores are expected to dilute profits. The company expects Ultra to be a positive contributor to the company’s bottom line by the fourth quarter.

The company also said it plans to open 70 to 80 Kay and Jared stores by the end of the fiscal year.
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From Adversary to Partner, Terry Burman Named Chairman of Zale Corp.

Terry Burman

Zale Corp.on Wednesday made a surprise announcement that Terry Burman was named board chairman of the Dallas-based jeweler, whose retail brands include Zales Jewelers, Zales Outlet and Gordon's Jewelers. Burman was the highly successful chief executive officer of Signet Jewelers Ltd. from 2000 till 2011, Zale Corp.’s main rival.

Burman replaces John B. Lowe, Jr., who has served as chairman for the past five years. Lowe will remain on the board, the company said. The announcement overshadowed its third quarter earnings report.

Burman, a 30-year veteran of the jewelry industry, joined Signet in 1995 as the chairman and CEO of Sterling Jewelers, Inc., the U.S. division of Signet and Zale Corp.’s main rival. Sterling is the largest specialty retail jeweler in the United States with more than 1,300 stores located in 50 states, including national chains Kay Jewelers and Jared the Galleria of Jewelry. Signet also is the largest retail jeweler in the United Kingdom.

Under Burman’s leadership Sterling and then Signet experienced robust growth during the high-growth economy of the 1990s and the early 2000s and even through the economic recession and sluggish economy since 2008. Meanwhile, Zale Corp., suffered during the economic downturn under several leadership and ownership changes closing more than 100 underperforming stores.

Before joining Signet, Burman held executive positions, including president and CEO of Barry’s Jewelers, Inc., which now does business as Samuels Jewelers. He serves on the boards of Yankee Candle Company, Inc. and Tuesday Morning Corp. He also serves on St. Jude Children’s Research Hospital Board of Governors. He has received numerous jewelry industry awards, including the American Gem Society Lifetime Achievement Award in 2010 and is the former chairman of Jewelers of America.

“Terry’s track record and industry knowledge make him uniquely qualified to contribute to Zale as we execute our plans for long term growth and shareholder value,” said Theo Killion, Zale Corp. CEO.

“I am delighted to assume the role of chairman of the board at Zale at such an important point in their turnaround program,” Burman said. “I am looking forward to working with Zale’s management and board to refine the company’s strategy and priorities to drive profitable growth and create shareholder value.”

Zale Corp. is a leading specialty retailer of diamond and other jewelry products in North America, operating approximately 1,710 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corp.'s brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at www.zales.com, www.zalesoutlet.com, www.gordonsjewelers.com, www.peoplesjewellers.com and www.pagoda.com. 

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Another Strong Year for Signet Jewelers

Signet Jewelers, the largest specialty retail jeweler in the U.S. and U.K., continues to benefit from strong retail sales in U.S., which more than offset weaker figures in the U.K.

The Bermuda-based company said Thursday that fourth quarter sales increased 11.8 percent, year-over-year, to $1.51 billion. Same store sales for the period ended Feb. 2, increased 3.5 percent compared to an increase of 6.9 percent in the prior fiscal year. E-commerce sales increased 46.9 percent to $63.9 million.

In its U.S. division sales for the fourth quarter increased 14.2 percent to $1.24 billion. Same store sales increased 4.9 percent compared to an increase of 8.3% in the fourth quarter Fiscal 2012. Sales increases were driven by broad based strength across most merchandise categories in both Kay and Jared retail chains and its acquisition of the Ultra Diamonds retail chain, the fifth largest in the U.S.

In its U.K. division total sales were up 1.8 percent to $268.4 million (fourth quarter Fiscal 2012: $263.7 million). Same store sales fell 1.9 percent compared to an increase of 1.7 percent in the fourth quarter Fiscal 2012. Sales performance was primarily attributed to lower store traffic and increased customer purchases of promotional merchandise, which impacted sales and gross margin.

In Fiscal 2013, Signet's total sales increased 6.2 percent to $3.98 billion. Same store sales were up 3.3 percent compared to an increase of 9 percent in Fiscal 2012. E-commerce sales increased 40.6 percent to $129.8 million.

In the US division total sales for the 2013 fiscal year increased 7.9 percent to $3.27 billion. Same store sales increased 4 percent for the year compared to an increase of 11.1 percent in Fiscal 2012. Sales increases were driven by broad based strength across most merchandise categories in both Kay and Jared, as well as the Ultra acquisition.

The number of merchandise transactions increased in Kay and Jared, the company said. Average merchandise transaction values were up in Kay stores due to changes in sales mix and down in Jared stores due primarily to the discontinuation of Rolex watches. E-commerce sales were $101.4 million compared to $68.5 million in Fiscal 2012, up $32.9 million or 48 percent.

In the U.K. division total sales fell 0.8 percent to $709.5 million. Same store sales increased 0.3 percent compared to an increase of 0.9 percent in Fiscal 2012. Sales performance was primarily attributed to lower traffic particularly in the fourth quarter.

In its guidance the company, which trade on the NYSE, said expectations are for same store sales in the first quarter to be up 5 to 7 percent.

“Signet had an excellent Fiscal 2013 with a 3.3% increase in same store sales and a 16.6 percent increase in earnings per share,” said Mike Barnes, Signet CEO. “The acquisition of Ultra, our share repurchase program and the increase in our quarterly dividend demonstrate our ability to capitalize on our excellent balance sheet to provide for our long-term growth and increase value for our shareholders.”

He added, “We are pleased with our progress quarter-to-date and expect to achieve our goals for the first quarter…. We will continue to advance our expansion goals as we integrate our recently acquired Ultra stores, execute on our multi-channel growth initiatives and expand our store base.”

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Signet Jewelers Holiday Sales Up 7.1%, Same-Store Sales Up 3.3%

Kay Jewelers, one of the U.S. brands
owned by Signet.

Signet Jewelers Ltd., the largest specialty retail jeweler in the U.S. and U.K., said Tuesday that sales for the November-December holiday period rose 7.1 percent to $1.23 billion. Same store sales were up 3.3 percent for the nine-week period.

Strong sales in the U.S. overcame a decline in sales for the company’s U.K. stores. Consolidated e-commerce sales increased by 39 percent, comprised of a 49 percent increase in the U.S. and an 8 percent increase in the U.K. Holiday sales for 2012 did not quite reach the level of growth that the jeweler saw in 2011, which was 7.5 percent.

“We saw particularly strong performance in the weeks and days leading up to Christmas,” said Mike Barnes, Signet CEO. “Business trends continue to be encouraging in the U.S. and have improved in the U.K. after the holiday season.”

The Bermuda-based jewelry retailer owns and operates Kay Jewelers; Jared, the Galleria of Jewelry; and a number of regional brands in the U.S. and H.Samuel and Ernest Jones jewelers in the U.K.

The company’s U.S. division saw a year-over-year sales increase of 9.9 percent to just over $1 billion, compared to an increase of 9.2 percent in the comparable nine weeks. Same store sales for the period increased 4.7 percent led by both Kay and Jared, compared to an increase of 9.2 percent in the comparable nine weeks. The total sales figure for 2012 includes $37 million from the Chicago-based Ultra Stores retail chain, which Signet acquired in October.
 
“In the U.S. we experienced broad based strength across our merchandise offerings led by our initiatives in bridal, branded and exclusive merchandise, colored diamonds, fashion jewelry and watches,” Barnes said.

Holiday sales in the company’s U.K. division fell by 5 percent to $203.4 million, compared to an increase of 0.9 percent in the comparable nine weeks. Same store sales in the U.K. were down 2.6 percent compared to an increase of 1.8 percent in the comparable nine weeks.

“In the UK watches and branded jewelry were the strongest performers,” Barnes said.

In its outlook, Signet said diluted earnings per share for the fourth quarter are projected at $2.05 to $2.10. Diluted earnings per share for the 53 weeks ending Feb. 2, 2013, are projected at $4.28 to $4.33.

Capital spending for Fiscal 2013 is anticipated to be $138 million to $142 million reflecting current estimates of project timing. In addition to the Ultra Stores, Inc acquisition. Signet says it anticipates 48 new US-based stores for the year.

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The Jewelry Industry is Better Prepared to Handle a Downturn

The opening day crowd during the 2011 JCK Las Vegas tradeshow held at Mandalay Bay. Photo credit: Anthony DeMarco

Not since 2009 has the global economy and the jewelry industry’s place in it been so unstable. This comes as the international jewelry industry descends on Las Vegas for a series of tradeshows beginning Monday (led by JCK Las Vegas at Mandalay Bay and The Couture Show at the Wynn Las Vegas) where retailers will purchase their inventory for the all-important holiday season. It’s one of the largest jewelry trade events on the global calendar and it will be a real test on whether the U.S. jewelry industry can withstand the latest onslaught of mixed economic news.

I think the jewelry industry will prevail. The industry itself has done little to exacerbate the fragile global economic situation. In fact, it has performed admirably during these difficult economic times—outside of the diamond industry with its mishandling of the Zimbabwe human rights issue and now diamond grading scandals at two labs. 

After the contraction of the U.S. jewelry industry in 2009, it has been posting mostly positive numbers and showing consistent, incremental growth. Unlike the banking industry, it has learned from its mistakes. The jewelry industry is not as leveraged as it was in 2008. It is doing better at using the Internet and social media instead of treating it as the enemy. Creativity has taken over as well. As the cost of materials increased, designers and manufacturers have created objects of adornment using more color, a variety of materials and high-quality craftsmanship. The jewelry industry as a whole is a smarter and more humble industry than it was prior to 2008.

However, it must get past an economic situation that is again rising to a boil led by two factors that just won’t go away: Wall Street’s reckless behavior and its defiant stance against any regulation; and the Euro crisis.

The Facebook IPO debacle managed by Morgan Stanley and JPMorgan Chase’s $2 billion-plus trading loss by taking large positions in credit default swaps show that Wall Street has learned nothing from the 2008 financial crisis that nearly took down the world economy.

Meanwhile, the end of the Euro or at least a serious contraction of the European Union now seems a possibility. Greece is on the brink of outright rejecting the monetary union and other countries are saddled with outrageous debt that member countries seem unable or unwilling to resolve. There are an endless number of theories as to what will happen if the Union disbands or shrinks, which tells me that no one really knows what will happen. But everyone in Europe seems to be scared.

The jewelry industry has its own challenges and victories, some of which were revealed this week. Among them:

* Tiffany & Co., the luxury retailer jeweler that has performed like a juggernaut throughout this recession, downgraded its outlook Thursday based on a softening of sales in the U.S. and abroad.

* Meanwhile, it’s the mid-market jewelers that are showing resiliency. Signet Jewelers, the largest specialty retail jeweler in the U.S. and U.K., whose brands include Kay and Jared, reported modest growth in the first quarter Thursday (sales up 1.4 and comps up 1.2 percent). Zale Corp., the long-struggling North American specialty retail jeweler, showed significant growth in its first quarter report Wednesday (8 percent increase in sales and comps).

* Online jewelry and diamond retailer, Blue Nile, reported a 3.6 percent first quarter increase in sales. However, lower markups led to a 9.7 percent decline in gross profits.

* The Swiss watch industry, which appeared invincible throughout the recession, is reporting that its phenomenal growth is slowing to just robust levels. Watch exports increased 9 percent in April, down from 16.1 percent for the first four months of the year, according to the Swiss Federal Customs Office.

* However, the large luxury conglomerates are still poised for strong growth throughout the world. For example, LVMH reported that its Watch & Jewellery division sales increased by 141 percent increase, year-over-year, to $826.6 million. This is misleading as LVMH acquired Italian luxury jewelry house, Bulgari, in March 2011. Excluding the Bulgari acquisition, sales increased 17 percent. Richemont, reported that jewelry and watch sales rose 32 percent for the year, with overall sales in the Americas up 26 percent.

Despite the uncertainty, I expect to see a positive environment and exciting new jewelry designs at the tradeshows. Most importantly, I anticipate business to be strong. Unlike 2008, the industry is better prepared today to meet these challenges.