Retail

Signet CEO cautious about jewelry sales later this year as Covid vaccines, travel pick up

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Key Points
  • Jewelry sales could see a slowdown later this year as the economy recovers from the pandemic, Signet CEO Gina Drosos told CNBC.
  • "We're very cautious on the back half of the year as the vaccine rolls out and more people are more interested in traveling and entertainment again," she said.
  • The owner of Kay Jewelers and Zales has seen strong sales so far this year, she added.
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Signet Jewelers CEO on earnings beat and strong outlook

Jewelry sales could see a slowdown later this year as a broader range of economic activity resumes from a pandemic-induced slump, Signet CEO Gina Drosos told CNBC on Thursday.

"We're very cautious on the back half of the year as the vaccine rolls out and more people are more interested in traveling and entertainment again. We think that could potentially have a negative impact on categories like jewelry," Drosos said on "Closing Bell."

The chief executive's comments came after earlier Thursday the owner of Kay Jewelers and Zales reported better-than-expected sales and per-share earnings for the quarter ending Jan. 30.

Quarterly revenues of $2.19 billion topped Wall Street's forecast of $2.1 billion, while the company earned $4.15 per share, 61 cents above analyst estimates. Comparable-store sales rose 7% in the quarter, besting the FactSet estimate of 5%.

Signet has seen the momentum carry into the current quarter, Drosos said, adding that the latest round of Covid stimulus checks and upcoming tax refunds are likely to help its business in the next few months.

"We've seen very strong sales to date in our first quarter. Globally, we're up 16% quarter to date. North America, that's over 20%. I think we could also see that flow through into a strong second quarter," said Drosos, who has served as Signet CEO since 2017. She's been on the board since 2012.

In its earnings release Thursday, the company forecast full-year sales between $5.85 billion and $6 billion for its 2022 fiscal year. Signet reported sales of $5.2 billion for the fiscal year that ended Jan. 30.

Signet shares rose by 3.37% in Thursday's session, setting a fresh 52-week high of $65.84 intraday. The stock is up 740% since this time last year, at which point the intensifying coronavirus pandemic was roiling financial markets.

The health crisis took a significant toll on the global economy, disrupting supply chains and putting millions out of work as governments imposed business restrictions meant to slow the spread of the virus.

It also changed consumer behaviors, including how people spent their money and what they spent it on as travel and entertainment options were limited. Online shopping sales surged, accelerating a shift away from brick-and-mortar stores that was already in place, analysts say.

Signet experienced a boom in e-commerce sales, too. In the quarter ending Jan. 30, online sales were up 70.5% compared with the same period last year, making up 23.4% of all sales. Comparable brick-and-mortar sales were down 4.2% in the quarter.

"I think we can continue to grow our business online," Drosos told CNBC. "I was very pleased to see that in the third and fourth quarter, even after our stores reopened, we still saw e-commerce growth north of 60%."

Signet will continue to "optimize" its footprint of physical locations, she added, "significantly" reducing its presence in lower-trafficked malls while still operating quality stores in other places. "Now we've brought a digital capability to that to connect it all together," she said.