Product Overhaul Drives Signet Growth

RAPAPORT... Signet Jewelers raised its outlook for the year afterproduct initiatives and clearance sales drove revenue growth in the secondfiscal quarter. Sales increased 1.5% to $1.42 billion in the three monthsending August 4, the retailer reported Thursday. Same-store sales - at branchesopen for at least a year - rose 1.7%, reflecting the impact of attempts toimprove "newness" and change the focus of product assortments, the companysaid. It also held discount promotions to make room for new items.Signet now expects sales in the range from flat to down 1.5%in the current fiscal year ending January 2019, from an earlier forecast of adecline in the low- to mid-single-digit percentages. It also improved itsearnings guidance. Its shares were up 24% in early trading Thursday.The jeweler is in the preliminary stages of its "Path to Brilliance"program, aiming to transform the business following weak sales. That planincludes enhancing its range of products, improving its e-commerce segment, andmaking its prices more competitive. "During the second quarter, we continued to see stabilizationin same-store sales, and we remain confident that we have the right strategiesin place to continue to drive operational improvement over the long term," saidSignet CEO Virginia Drosos. The jeweler remains cautious for the important fourthquarter as many of its initiatives will not go into effect until later thisyear, Drosos added. Same-store sales at Signet's Zales division grew 7%, whileJared was up 1.2%, outweighing a 2.1% decline at Kay Jewelers. Sales at JamesAllen, the e-commerce platform Signet acquired last year, rose 25% by the samemeasure. Total e-commerce proceeds leaped 83% on a reported basis, drivenpartly by the contribution of James Allen. The jeweler also noted an increase in bridal- and fashion-jewelry salesin North America due to a greater percentage of new products in the coreoffering, in addition to the impact of clearance sales.However, the company recorded a loss of $31.2 million versusa profit of $85.2 million a year ago due to restructuring charges related tothe Path to Brilliance program and the impact of Signet's recently completedoutsourcing of credit operations. Meanwhile, Signet chief financial officer Michele Santana will leave topursue other opportunities after eight years at the company, Signet also announcedThursday. She joined Signet in 2010, andbecame CFO in 2014, overseeing the acquisitions of Ultra Stores, ZaleCorporation and James Allen parent company R2Net, as well as the creditoutsourcing. Santana will remain in the role until Signet appoints asuccessor, and will stay on as an adviser until next year. The company expectsto appoint a new CFO by the end of January, it said.Image: Cortney Martin