There are fresh signs that this wasn’t such a holly jolly Christmas for many retailers after all.
Signet Jewelers, (SIG) the owner of the Kay Jewelers, Zales and Jared chains, on Thursday reported weak holiday sales and hinted that it will speed up store closings, a disappointing development for a retailer in what was a strong consumer spending environment over the holidays. MasterCard Spending Pulse recently estimated U.S. Retail sales rose 5.1% during that period. For jewelry, the figure was a 3.7% jump.
But Signet said sales at stores open for at least 12 months fell 1.3% in the nine weeks ended January 5. Signet pointed to “reduced traffic during key December gifting weeks.” Its higher end Jared chain, which operates outside of malls in stand-alone stores, saw the worst of it with comparable sales down 8%. Signet CEO Virginia Drosos said in a statement that the company will “move decisively to improve profitability through aggressively optimizing our cost structure and continuing to right-size our store base,” retail executive speak for closing stores.
The weak results come a day after Signet agreed to pay $11 million in penalties to federal and state regulators to settle charges it was opening credit-card accounts without customers’ consent at its stores. Signet has also had to deal with the fallout in 2017 of accusations of widespread sexual harassment. Drosos became CEO nearly 18 months ago in the wake of that controversy.
Beyond any hits to its reputation, Signet has had to deal with a slowdown in luxury sales. Spending Pulse said spending in that category, which includes jewelry, fell 1.7% during the holidays. And some competitors like Macy’s are taking some market share in what Signet called a highly “promotional” environment. “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 wrote in a research note.
The soft Christmas period prompted Signet to lower its full-year forecasts, sending its shares down 22% to $26, barely more than one-sixth their level in 2015. Signet, at least, is in good company: other retailers to have disappointed Wall Street with their holiday numbers include J.C. Penney, Macy’s, L Brands’ Victoria’s Secret, and Nordstrom.