Signet Jewelers Cuts Q4 Guidance Range --> -3.96% in premarket only 5,6k traded
Signet Jewelers (SIG 87.46) is the world's largest retailer of diamond jewelry. The holidays, then, are quite literally its time to shine in the retail industry. The holiday sales update provided by the company this morning, however, indicated that its performance lacked some usual sparkle.
Signet operates approximately 3,600 stores under the name brands of Kay Jewelers, Zales, Jared The Galleria of Jewelry, H. Samuel, Ernest Jones, Peoples and Piercing Pagoda. These stores are situated in mall and off-mall locations. Each of those brands, incidentally, saw same-store sales decline this holiday season, with the lone exception of Piercing Pagoda (+4.2%).
Many warnings have been heard already from mall-based retailers, mostly from apparel companies, which have been afflicted by soft customer traffic. Many of those same warnings, though, included an upbeat assessment at least of the company's e-commerce business. In Signet's case, however, the sales downturn it saw in the holiday period was attributed mostly to the underperformance of its Sterling division e-commerce business.
Briefly, Signet's holiday season summary featured a 4.6% decrease in same-store sales versus a 5.1% increase in the same period a year ago and a 5.1% decrease in total sales versus a 5.3% increase in the year-ago period
The downturn in the jeweler's sales prompted a culling of its fourth quarter guidance ranges. In particular, Signet now expects adjusted earnings to range from $4.00 to $4.05 per share, versus prior guidance of $4.00 to $4.20, and its same-store sales to be down 4.3% to 4.8%, compared to a prior view that they would be down 2.0% to 4.0%.
Signet said its merchandise categories and collections were broadly lower in the mall and e-commerce selling channels, while select merchandise and other selling channels performed relatively well.
The source of dismay for many investors today was the acknowledgment that its e-commerce sales in the holiday season were down 2.4% to $142.5 million. That decline was blamed on poorly performing enhancements made recently to its e-commerce systems across all Sterling Jewelers divisions store banners, which use a common platform and accounted for approximately 62% of Signet's total fourth quarter sales.
Reportedly, those enhancements failed to adequately deal with high holiday volume, which resulted in customer communication issues and purchasing disruptions.
Signet, then, seems to have hurt its own cause at a time when the sales environment for mall-based retailers was already extremely challenging due, in part, to the rise of online competition. Ironically, Signet provided online competition for itself with its technical shortcomings.
The jewelry retailer said it is working to improve the overall customer digital journey, yet that clarification isn't helping its stock at the moment, which is down 6% in pre-market action on the heels of an 11% decline it has registered since December 9.