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THE YEAR OF THE COVID PANDEMIC PROVIDES THE WORST AND BEST OF TIMES FOR WORLD’S LARGEST JEWELERY RETAILER

 

The COVID pandemic has proven to be a rollercoaster ride for the world’s largest specialty jewelry retailer, Signet Jewelers, the parent company of jewelry retail chains in the United States, United Kingdom and Canada, including Kay Jewelers, Zales, Jared, H. Samuel, Ernest Jones, Peoples Jewellers, Piercing Pagoda and the online James Allen brand.

Just in June last year, about three months into the crisis, it reported that the corporation was planning to permanently close 400 of the 3,200 brick and mortar stores that it operates.

For the three-month period ending May 2, Signet’s revenues had fallen by more than 40 percent to $852 million, down from $1.4 billion reported for the same quarter in 2019. Operating losses increased to $291 million, compared with a loss of $2.6 million the same time a year before — this in spite 6.7 percent increase in online sales.

Signet ended the quarter with $1.3 billion in debt and $2.4 billion worth of inventory. Its share price was down 11.6 percent year on year. To help mitigate it losses, it drew down on a $900 million revolving credit facility, reduced capital and operating expenses, decreased planned inventory  and suspended its dividend program.

Those were the worst of times. But they were relatively short lived.

SIGNET ENDS QUARTER OF A BULLISH NOTE

On May 18, 2021, the company reported better-than-expected sales and per-share earnings for the quarter that ended January 30. Revenues for the three-month period equaled $2.19 billion, slightly higher than Wall Street’s bullish forecast of $2.1 billion. Comparable-store sales rose were up 7 percent during the quarter.

Interestingly, online sales grew by 70.5 percent during the three months, when compared with the same period in 2020. All told, they comprised 23.4 of the group’s sales from November through January, and they more than offset a 4.2 percent fall in brick-and-mortar sales during the quarter.

In its earnings release, Signet forecast full-year sales between $5.85 billion and $6 billion for the 2022 fiscal year.

Signet CEO Gina Drosos took a deliberately measured when she spoke on CNBC’s Closing Bell.  “We’re very cautious on the back half of the year as the vaccine rolls out and more people are more interested in traveling and entertainment again. We think that could potentially have a negative impact on categories like jewelry,” she stated.

Still, she added, the company expects further online grown, even as it deliberately reduced its exposure and presence in traditional shopping malls.

RESPONSE TO COVID ACCLERATES ONLINE TRANSITION

In many respects, it was the COVID epidemic and its devastating effects that jolted Signet from a malaise, during which it found itself losing ground to more aggressive online jewelry marketers.

An informational website, called “What is a Diamond,” created by CIBJO, the World Jewelry Confederation, is intended is to inform consumers and members of the jewelry and gemstone industry about the precise terminology that should be used to describe stones that grew through natural geological processes and those that were synthesized by man. It is located on the web at www.whatisadiamond.org.

A Signet member of staff sanitizes a store during the height of the COVID crisis.

In June last year, at the same time it reported its dismal quarterly results, the company announced that was accelerating its transformation into a channel-agnostic retailer, enabling store staff for the first time to serve customers from home using technology such as chat, video, social media and virtual by-appointment private shopping consultations.

“Since temporarily closing our stores in late March,” Ms. Drosos said at the time, “we’ve empowered our people with new and innovative technology so they can continue their role as trusted advisors, helping our customers celebrate special moments and relationships. As we reopen more stores, customers can choose how they’d like to engage with our store brands – either a safe instore experience, a digital experience, or a mix of both. This underscores Signet’s commitment to reimagining the jewelry customer experience, from education through ownership.”

It was a major step in a process began more than three years earlier, during which the jewelry sought to revive a flailing online strategy. A critical step was the purchase in August 2017 of the Israeli-based R2Net, by which Signet took control of JamesAllen.com and it affiliated Segoma Imaging Technologies, which creates 3D displays of diamonds and jewelry for consumers buying on the web.

In 2018, Signet launched its three-year Path to Brilliance transformation plan, with a focus on expanding its online presence. This involved creating omnichannel environment, by which, for the first time ever, customers of Signet’s various brands could book “virtual” appointments, ask live experts for advice online, join live events and engage across their personal social media channels.

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