Kay Jewelers owner Signet says sales rebounding after weak holiday

The owner of Kay Jewelers said sales are recovering following a disappointing holiday season that led Wall Street to slash expectations for the jewelry retailer.  

Signet Jewelers Ltd. sees revenue of $1.5 billion to $1.53 billion in its fiscal first quarter, the company said Wednesday. The average estimate compiled by Bloomberg is close to the low point of that range. The company also expects e-commerce sales and revenue from stores that have been open for at least a year to be flat to up 2% in the period. The average of three analyst estimates is near the midpoint of that range. 

Signet shares gained 14% in trading before US markets opened Wednesday. They had lost 40% this year through Tuesday’s close. 

Signet, which also owns the Zales and Jared chains, warned Wall Street earlier this year that holiday sales were worse than expected, in part because its brands didn’t offer enough gold jewelry or lab-grown diamonds in the $200-to-$500 price range that shoppers were looking for.

On top of that, engagements have recovered more slowly than the company anticipated following the pandemic. Bridal sales account for about half of Signet’s annual revenue. 

The company said Wednesday that it took steps to address those shortfalls in recent weeks.

“Since holiday, we increased our depth of assortment at key price points while also benefiting from improved bridal trends,” Chief Executive Officer J.K. Symancyk said in the company’s statement. That led to a sales rebound in January, with the trend continuing and the company observing “growth across all categories” so far in the quarter, he added. 

Symancyk, who took over in October and previously served as CEO of PetSmart Inc., has told analysts he wants to rely less on the bridal category and boost sales of fashion jewelry, including pieces with more lab-grown diamonds. 

The company is also looking to reduce its reliance on shopping malls. Chief Financial Officer Joan Hilson said the company will transition more than 10% of its mall locations “to off-mall and the e-commerce channel over the next three years.” 

Signet is forecasting revenue of $6.53 billion to $6.8 billion in the current fiscal year, while analysts have projected a total that’s closer to the top of that range. 

The company also increased its quarterly cash dividend by 10% to 32 cents per share, above estimates.