Signet to close nearly 400 stores

Dive Brief:

Signet Jewelers on Tuesday said that at least 150 stores in North America and 80 stores in the U.K. won't reopen after closing due to the COVID-19 pandemic. By the end of its fiscal year, the retailer will also close "at least an additional 150 stores," according to a company press release. Signet runs about 3,200 stores under the Kay Jewelers, Zales, Jared, H.Samuel, Ernest Jones, Peoples and Piercing Pagoda banners, and the JamesAllen.com website.
The retailer said it's accelerating a shift to an e-commerce focus. Digital sales in the quarter rose 6.7% to $164.7 million. Excluding the temporary closure of a James Allen distribution center, those sales grew 18.2%.
But that did little to mitigate first quarter declines. Total sales fell 40.5% to $852.1 million, as store comps declined 38.9% year over year. Operating loss expanded to $291.1 million, or 34.2% of sales, from $2.6 million, or 0.2% of sales in the year-ago quarter.

Dive Insight:

Signet closed all of its stores in late March amid restrictions to stop the spread of the COVID-19 outbreak, and began a "staggered store reopening plan" last month, according to its release.

More than 1,100 stores are now open again, and the company called their performance "encouraging with sequential week over week sales performance improvements in open stores." While executives on Tuesday told analysts that the results from store reopenings are exceeding their expectations, they also emphasized their plans to close nearly 400 stores. Stores in North America slated for closure are mostly in B and C malls, CEO Virginia Drosos said during a conference call Tuesday.

The pivot to e-commerce entails improving website performance and capabilities and "building a roster of sales associates that are adept in virtual selling."

The company is staking some of its future performance on cost cuts already envisioned under a previously announced turnaround plan, with some extra savings achieved during the pandemic closures helping it to exceed its original goal of $200 to $225 million in cost savings, per the release. "Additional structural cost savings of more than $100 million have been identified, for the fiscal year, in response to the COVID-19 pandemic," the company said.

In March, the jewelry retailer also moved to shore up its finances. Most store and support center employees were temporarily furloughed and senior executives' cash compensation temporarily. The company also drew down $900 million under its senior secured asset-based revolving credit facility.