Signet Jewelers finances online sales with cost savings and reduced store hours
Jewelers Signet rings Ltd.
, the parent company of Kay Jewelers and other retail brands, is saving money in its supply chain and cutting some store hours to pay for a continued push towards online shopping.
Bermuda-based Signet on Thursday announced plans to eliminate up to $ 200 million in costs over the next three years. Last year, the retailer ramped up investments in its e-commerce channels, including virtual appointments with customers, after the pandemic forced it to temporarily close stores. Online sales rose 58% to $ 1.2 billion in the fiscal year ended Jan. 30 from the prior year period, but total sales fell 15% to 5, $ 2 billion.
The company is now looking for ways to operate more efficiently, according to CFO Joan Hilson, who took over the role two years ago. Among them: the reduction of the opening hours of certain stores outside shopping centers and the adjustment of the workforce according to pedestrian traffic. Signet also wants to reduce costs throughout its supply chain, for example by no longer segregating sets of products, such as wedding rings and solitaire diamond rings.
Customers now have more options online to personalize their orders, Ms. Hilson said. “We have been able to really improve the customer experience and in doing so, we are eliminating a cost,” she said.
Signet plans to use a portion of the savings to improve its website’s navigation and search functions, as well as features that allow customers to virtually try on jewelry, according to Hilson. The company will also invest in back office software to help it manage costs throughout its supply chain, she said.
Signet, which also operates Zales, Jared and other well-known jewelry brands, is closing around 100 physical stores in its fiscal year which began Feb. 1 as part of an effort to reduce its reliance on shopping centers. It operated 2,833 stores as of January 30, down 12% from the same period last year.
Separately, Signet plans to open up to 100 kiosks in shopping malls for Piercing Pagoda, one of its cheapest but best performing brands, Hilson said. The brand generated revenue of $ 337.5 million in the last fiscal year, up 2% from the previous year. In comparison, the revenues of the company’s biggest brands, Kay and Zales, fell by 17% and 12% respectively.
The company’s announcements on Thursday came after several years of restructuring and store closings. Signet has prioritized strengthening its balance sheet over the past year, with cash and cash equivalents reaching $ 1.2 billion as of Jan. 30, from $ 374.5 million a year earlier, said Mrs. Hilson.
One of the main reasons for improving cash levels, Hilson said, is that Signet has extended payment terms to all of its vendors in an effort to free up working capital. Some of the extensions the company received in the early days of the pandemic have remained in place, she said. The company nearly doubled its days paying, but declined to provide details on how long its payment terms last.
Signet’s bargaining power with suppliers has increased as small independent jewelers, whose numbers have declined in recent years, have struggled to stay afloat during the pandemic, said Tim Vierengel, senior research analyst for jewelry. shares at Northcoast Research Holdings LLC, an investment research firm.
The total number of jewelry retailers in the United States declined 2.2% in the fourth quarter of 2020, to 18,369, according to the Jewelers Board of Trade, an industry association.
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