Jewelry Retailers Bring Back Luster, but Hurdles Remain
September 05 2019 - 2:22PM
Dow Jones News
By Jessica Menton
Some struggling jewelry retailers have taken on a new shine.
Shares of Signet Jewelers surged 28% Thursday afternoon, on pace
for their biggest one-day gain since 1996, after the world's
largest retailer of diamond jewelry delivered profit and revenue in
the latest quarter above Wall Street estimates. The company also
raised its adjusted profit outlook for the year.
This better-than-expected earnings report comes as mall-based
jewelry retailers have struggled in recent years amid declining
foot traffic, while competition from e-commerce has squeezed sales.
They also have had to grapple with other headwinds including
debt-laden millennial customers who have sought more affordable
engagement rings.
The challenges have battered shares of jewelry chains, with
Signet's stock shedding 78% over the past 12 months even after
Monday's rally, while luxury jewelry maker Tiffany & Co. and
Swiss watchmaker Swatch Group Ltd. have lost 27% and 30%,
respectively.
Signet, which owns Kay Jewelers, Zales and Jared The Galleria of
Jewelry, last year said it would close more than 200 stores but
open new ones outside of shopping malls in a bid to offset a drop
in sales at its existing locations. Since then, Signet has reported
surprisingly positive results thanks to its efforts to reduce costs
and improve its e-commerce operations.
"The e-commerce mix that Signet has been able to build up over
the past six quarters has been quite impressive," said Tim
Vierengel, senior research analyst at Northcoast Research, who
added that this is the first year the company has spent more on
online advertising as opposed to traditional outlets such as
television and radio. "That's clearly paying off and it's driving
people to click on their websites."
To be sure, foot traffic for the industry remains weak. Tiffany
posted a decline in second-quarter sales as the company continued
to see fewer foreign tourists in its U.S. stores. Meanwhile,
Swatch's sales in the first half of the year missed analysts'
expectations, though the company projected strong growth ahead.
(END) Dow Jones Newswires
September 05, 2019 15:07 ET (19:07 GMT)
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