Signet Posts Jump in Revenue But Swings to Net LossNovember 25, 14
The company said that it swung to a loss of $1.3 million in the quarter compared with net income of $33.6 million a year before. The net loss was due to a Zale unit loss of $13.2 million and other expenses concerning the acquisition of Zale.
The jeweler reported that same-store sales climbed 4.2%, above the high-end of its pre-announcement forecast of 2% to 4% growth. Signet added that its Kay and Jared units achieved same-store sales growth of 7.5% and 6.5%, respectively.
However, the Zale division posted a decrease of almost 1 percent in same-store sales due to the timing of a phase-in of new products replacing nonperforming items, along with integration issues and strong competition in Canada.
Signet completed its acquisition of Zale in May, and has more than 3,600 retail outlets.
CEO Mark Light said Signet is pleased with the integration process, and is confident that it remains on track to meet its goal of $150 million to $175 million in synergies through the end of January 2018. "In the short time period since owning Zale, we have been able to implement select initiatives to further the Zale Christmas business.
"Positive momentum in our UK division continued with our highest third quarter increase in same store sales, at 3.7%, in seven years and our best operating result in four years. We believe our Sterling and UK divisions are well-prepared to deliver for the holiday season."
Separately, as part of Signet’s ongoing efforts to manage its diamond supply chain, Signet announced it has entered into a rough diamond supply contract in Botswana with De Beers.
Light said: “The De Beers Sight advances our strategic diamond sourcing efforts to the next level. Following last year’s purchase of a diamond cutting factory in Botswana, we believe, as a Sightholder, that we are now far ahead of most industry peers. This provides us greater access to supply in a growing supply-and-demand gap."