Kay Jewelers Owner Signet Climbs as Jewelry Makes a Comeback

(Bloomberg) -- Signet Jewelers Ltd., the owner of jewelry chains Jared and Kay, gave another sign the U.S. jewelry industry is past the worst of it, with preliminary comparable sales turning positive in August following a challenging start to the summer. Shares rose.

• After reporting a 31.3% decline in same-store sales in the second quarter ended Aug. 1, the company reported a stronger start to the third quarter. August same-store sales rose about 10.9%, it said, and online sales rose 65.2%.

Key Insights

• Signet, which also owns Zales, joins rival jewelry retailers in reporting a recent turn for the better. After a difficult start to the pandemic, Tiffany & Co. returned to profitability in the summer quarter, while Macy’s Inc. said Wednesday luxury items, including diamonds, are performing disproportionately well.
• For years, the jewelry industry had been hesitant to embrace online shopping because it sells special and expensive items that customers want to see and touch before buying. That’s changing quickly during the pandemic. Second-quarter North America e-commerce sales grew 72.7% for the company.
• Signet says it now expects net savings of at least $285 million as part of its Path to Brilliance turnaround plan, up from the original target of $225 million -- largely due to a reduction in staffing levels. Before the pandemic hit, Chief Executive Officer Gina Drosos was already in the middle of a multiyear turnaround plan centered on expanding e-commerce and eliminating poorly performing stores. This just accelerated the push.

Market Reaction

• Shares rose as much as 5.3% in New York. They had fallen 14% year to date through Wednesday.
• See the company statement here.

©2020 Bloomberg L.P.