Signet Jewelers has reported unfavourable sales results for the festive trading period.
In a report on the company’s seasonal sales for the nine weeks ended December 31, 2016, Signet reported a 19.8% drop in total sales across the UK jewellery division, which encompasses Ernest Jones and H. Samuel. Signet attributes this steep decline to unfavourable foreign currency exchange rates.
Same store sales for the UK division dropped by 3.7% to $184.3m (£150m), with same store sales for H. Samuel and Ernest Jones dipping by 4.9% and 2.2% respectively.
In the UK same store sales were driven primarily by fashion jewellery and bead, most notably at H. Samuel, offset in part by higher sales of bridal and watches.
Across the board for Signet same store sales decreased by 4.6%, compared to an increase of 5.1% in the nine weeks ended January 2, 2016.
Total sales decreased 5.1% to $1,940.9m (£1,581m), compared to an increase of 5.3% in the prior year. Total sales on a constant currency decreased 3.3%.
Overall same store sales decreased by 4.6% and Signet’s e-commerce sales throughout the Christmas trading period were down 2.4% to $3.5m (£2.8m).
Signet chief executive officer, Mark Light, comments:
“Signet’s disappointing holiday results were driven principally by underperformance in its Sterling division e-commerce business,” comments Signet chief executive officer, Mark Light. “A preliminary view of market data suggests that the jewellery category was broadly flat to modestly down with in-store sales down mid-single-digits and e-commerce sales up double-digits. Signet’s in-store results were in-line with the jewellery market, but technical performance issues in Sterling’s e-commerce platform largely led to Signet’s lower-than-expected results.”
The company says Sterling’s challenges in its e-commerce platform were due to recent enhancements that did not perform as expected when exposed to high holiday volume. Signet will now be investing and directing more resources to improve the functioning of the platform and the overall customer digital journey.
Light continues: “Select categories, collections, and other selling channels performed relatively well. This included diamond fashion jewellery, bracelets, earrings, Ever Us, Vera Wang Love, and the kiosk selling channels. We will continue to invest in the long-term growth of our business and build upon our competitive strengths and leading market position. Signet continues to focus on solid expense and working capital management leading to a disciplined capital allocation.”
Signet is maintaining the low-end of its earnings guidance and revising same store sales taking into account the holiday sales results and post-holiday sales to-date.