Signet Jewelers has been the worst-performing stock in the S&P 500 this month and this year, as it contends with retail woes and some of its own challenges.
Shares of Signet, which owns and operates the Kay Jewelers, Zales and Jared jewelry-store chains, have shed 27% in May through Tuesday’s close, putting them on track to close out the month as the biggest decliner in the S&P 500.
Signet shares have suffered alongside several other retailers this year as competition from e-commerce has squeezed sales at brick-and-mortar stores.
The jewelry retailer reported earnings of $1.03 a share for the latest quarter last week, down from $1.87 per share in the year-earlier period and below analysts’ March 31 expectations of $1.70 a share, according to FactSet. Signet shares fell 7.8% last Thursday after the earnings were released.
“As anticipated, we had a very slow start to the year as continued headwinds in the overall retail environment were exacerbated by a slowdown in jewelry spending and company specific challenges,” said Mark Light, Signet chief executive, on the company’s earnings call.
The company has also faced allegations of sexual harassment and discrimination against women employees in some of its stores. Signet resolved some of that recently, saying in a press release in early May that it reached an agreement with the Equal Employment Opportunity Commission regarding the pay and promotions of female employees at Sterling Jewelers Ltd., and that there were “no findings of liability or wrongdoing.” A class-action case is still pending, according to Cohen Milstein Sellers & Toll, a law firm representing the plaintiffs. Signet has also said it hired a former federal judge to review its current and future policies, and has called the sexual-harassment claims “distorted and inaccurate.”
Weaker mall traffic and a worsened brand reputation are hurting Signet, S&P Global Ratings said May 26 in a report in which it downgraded its outlook for the company to negative from stable.
Signet shares are down 49% this year through Tuesday.
Shares of rival Tiffany & Co. fell 7.3% last week–marking its biggest weekly percentage decline since January 2016–after it reported weaker-than-expected sales for the latest quarter. Macy’s Inc., whose shares are down 21% in May, reported its ninth straight quarter of declining same-store sales earlier in the month.
Signet said alongside its latest earnings that it plans to close underperforming stores and outsource its consumer-financing operation, which it believes could improve its financial results.
“We think management’s initiatives to improve performance could take some time,” S&P Global Ratings said in its report last week.
June 01, 2017 at 12:46AM
from Liying Qian
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