Signet Jewelers has reported a 12% decrease in sales for the third quarter of the fiscal year 2023.
The company saw its sales of $1.4 billion (£1.1b) decrease by $190.8 million (£151.4m) at the end of Q3, 28 October. Additionally, same store sales went down by 11.8%.
Virginia Drosos, CEO of Signet Jewelers, held that third quarter results are generally more mediocre than others due to not having a gifting holiday, and this is when the company tends to heavily invest in marketing for the upcoming holiday season.
Signet is one of the world’s largest retailers and the parent company of several jewellery store chains, including Kay Jewelers, Zales, and Jared, all popular for engagement rings.
As the bridal category, inclusive of engagement rings, historically makes up almost half of Signet’s sales, disruptions to when couples get engaged hinder the company’s profits.
Especially since the COVID-19 pandemic disrupted the dating cycle and the pace at which couples go through the process of getting engaged, sales of engagement rings have slumped.
Headwinds in engagements, however, are expected to recover this year, coming into fiscal 2025 and over the next five years, according to the company’s data.
This rebound began on Black Friday weekend, with a large increase in engagement ring sales.
In the first nine months of 2023, Signet’s sales totalled $4.67 billion (£3.71b), down 10% in comparison with the same period in 2022.
For its international banners, the financial results report also showed same store sales for its UK jewellery stores, H Samuel and Ernest Jones, down by 4.6% year-on-year to $94 million (£74.6m).
The jewellery giant recently sold 15 of its Ernest Jones stores to Watches of Switzerland, with the potential for six more additional retail locations by the end of the fourth quarter.
The accretive sale multiple from the 15 stores generated proceeds of approximately $53 million (£42m), the company discloses.
Signet describes the sold stores as “the divestiture of a non-strategic business”, which allows Signet to more quickly apply key elements of its UK transformation plan.
The group is forecasting full year sales of $7.07 billion (£5.6b) to $7.27 billion (£5.8b) despite headwinds in engagements.
In the fourth quarter, Signet anticipates sales of $2.4 billion (£1.9b) to $2.6 billion (£2.1b).
Virginia Drosos said: “We delivered earnings on the high end of our expectations driven by continued progress on our strategic goals.
“Trends through Black Friday weekend, including sequential improvement in engagement trends, are performing in line with guidance expectations for the fourth quarter.
“As we enter the holiday season, jewellery remains a top of mind gifting category for consumers in a value conscious shopping environment.
Joan Hilson, chief financial, strategy and services officer, added: “We’re reaffirming guidance for FY2024 with the full year outlook updated for the profitable and strategic sale of 15 primarily luxury watch stores in the UK.
“We continue to make progress expanding gross margin through merchandise and sourcing strategies and growth in services revenue.
“Cost savings initiatives are on track and healthy inventory enables product newness as we enter the holiday season and improved free cash flow, allowing Signet to return nearly $160 million to shareholders already this year.”
