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Signage for Kay Jewelers, a subsidiary of Signet Jewelers Ltd., is displayed on the exterior of a store in New York.
Signet Jewelers shares tanked more than 21 percent Thursday morning after the diamond retailer slashed its profit outlook and said holiday sales came up short of expectations. The company also hinted it could be closing more stores in the future.
The parent company of jewelry brands including Kay, Zales and Jared said sales at stores open for at least 12 months were down 1.3 percent for the nine weeks ended Jan. 5. Signet said it saw “reduced traffic during key December gifting weeks.”
The news follows a slew of disappointing holiday sales reports this year, including those from Victoria’s Secret parent company L Brands, Macy’s and Nordstrom. Some analysts are already predicting 2019 will be much harder for the retail industry to weather, if companies haven’t been able to perform when the consumer is strong.
“A clearly promotional category heading into holiday – led by department stores that are pushing more aggressively into the category – proved to be too much for Signet to overcome, requiring more intense promotional activity than planned to catch up through December,” Evercore ISI analyst Omar Saad said in a note to clients.
Building on its dismal results, Signet has cut its profit and sales outlooks for the fourth quarter and fiscal 2019.
For the period ended Feb. 2, Signet now expects same-store sales to be down between 1.6 percent and 2.5 percent, compared with a prior range of down 1.5 percent to up 1 percent. It says adjusted earnings per share should be between $3.77 and $3.92, compared with a prior range of $4.35 to $4.59. Analysts had been calling for adjusted earnings of $4.43 a share, according to a poll by Refinitiv.
For fiscal 2019, it says same-store sales will now be roughly flat, compared with a prior range of flat to up 1 percent. It says adjusted earnings per share should be between $3.53 to $3.69, compared with a prior range of between $4.15 to $4.40. Total sales should be $6.26 billion, Signet said, down from previous expectations for $6.31 billion.
“We will move decisively to improve profitability through aggressively optimizing our cost structure and continuing to right-size our store base, as well as more effectively managing our inventory,” CEO Virginia Drosos said in prepared remarks.
Signet will share more details about its fourth-quarter performance when it reports earnings on March 14.