2018 was supposed to be the year when Signet Jewelers in the United States and UK started to see results from its root and branch Path to Brilliance turnaround plan.
Instead, the crucial Christmas trading quarter that covers the three months ending February 2 was a flop for the group, with heavy discounting driving same store sales down by 5.8% for H. Samuel and 8.9% for the more upmarket Ernest Jones.
Surprisingly, Ernest Jones, which sells premium watches from the likes of Breitling, TAG Heuer, Tudor and Omega, fared worse than its higher volume stablemate H. Samuel. In recent years the two retail brands have been roughly the same size in terms of turnover, but for the most recent quarter H. Samuel sales were $102.8 million while Ernest Jones came in at $92.2 million.
The same store sales decline was driven by lower sales in bridal jewellery, fashion jewellery and fashion watches, partially offset by higher sales in prestige watches, Signet says.
By contrast, Beaverbrooks, a direct competitor to Ernest Jones on an almost perfect brand-by-brand basis, just reported full year sales up 2.5% to £129 million.
The UK was singled out by Virginia C. Drosos, Signet’s chief executive officer, in her analysis of the final quarter of its 2019 financial year. Referring mainly to initiatives in the United States, she reports: “In Fiscal 2019, we began our Path to Brilliance transformation journey, building foundational capabilities to drive future growth. We made progress on our Path to Brilliance initiatives, achieving double-digit eCommerce growth, delivering $85 million of net cost savings, and continuing to optimize our store footprint. However, we did not finish the year as strongly as expected due to a highly competitive promotional environment, continued consumer weakness in the UK, and lower than expected customer demand for legacy merchandise collections that impacted our holiday fourth quarter results.”
Seb Hobbs, Signet’s president and chief customer officer has left the company, but will continue to be paid for a year and will help Ms Drosos for three months, according to a filing with the SEC.
The group’s chief financial officer resigned in March.
Part of the Path to Brilliance plan is to close unprofitable stores and increase ecommerce sales. In the UK, H. Samuel has closed 13 stores since February 2018 and now has 288 doors. Ernest Jones has closed 17 stores and has 189 remaining. Ecommerce sales declined 6.9% in the UK in the quarter.
World-wide, the group has closed 262 stores in the past year and expects to dispose of another 150 or more in the current financial year.
Signet’s total global sales were $2.15 billion, down $138.4 million or down 6.0%, in the 13 weeks ended February 2, 2019 on a reported basis and down 5.4% on a constant currency basis.