Signet Jewelers to close 200 stores - MarketWatch
Signet Jewelers Ltd. said it will close more than 200 stores this fiscal year but open new ones outside of shopping malls, as one of the biggest mall-based chains combats slumping sales at its existing locations.
The jewelry retailer, which owns Kay Jewelers, Zales and Jared The Galleria of Jewelry, said it hasn't adapted quickly enough as consumers make fewer trips to stores and shop more online or on their smartphones. The company's sales have declined for the past two fiscal years.
Three-fourths of the stores Signet aims to close are in malls where there are other Signet stores, Chief Executive Gina Drosos said on the company's earnings call Wednesday. Most of the closures will happen after the holiday shopping season.
Signet said it plans to open 35 to 40 new stores in the current fiscal year, though the new locations "will be focused on already-proven off-mall formats and desirable markets," Ms. Drosos said.
In three years, Signet plans to have fewer stores than it will at the end of the 2019 fiscal year, she said. The company currently has more than 3,500 stores. As of March of last year, Signet had planned to close 165 to 170 stores during fiscal 2018.
"Our plan is focused on closing our lowest-performing doors," she said. "These stores are not losing meaningful operating income, but do not meet our return expectations."
Shares of Signet fell 20% on Wednesday afternoon to $38.56. In the past year, they've fallen 43%.
The company's restructuring also involves reducing costs and improving e-commerce. In September, Signet purchased R2Net, which owns Segoma Imaging Technologies, a display technology firm, as well as jewelry retailer JamesAllen.com, for $328 million in cash.
Signet expects net cost savings of $85 million to $100 million for the current fiscal year from the new plan, with $125 million to $135 million in pretax costs tied to those reductions.
Ms. Drosos, who has been CEO since August, said on Wednesday's call that Signet "didn't invest fast enough" in e-commerce and mobile commerce. She also said the company had been slow to respond to changes in the sector, including declining mall traffic and shifts in customer buying behavior. The former Procter & Gamble Co. executive had been a Signet director before taking over as its CEO.
The company expects sales in the current fiscal year to fall by low- to mid-single-digit percentages, to a range of $5.9 billion to $6.1 billion.
Fourth-quarter sales rose 1% from the year before, to $2.29 billion. Total same-store sales fell 5.2%, declining at Kay, Jared and the company's Zales division but rising at R2Net.
Net income rose 18% to $351.3 million, or $5.24 a share, from the $297.5 million, or $3.92 a share, a year ago.
Write to Allison Prang at allison.prang@wsj.com
