US Sales Remain Strong At Signet Jewelers While UK Sales Disappoint

Signet Jewelers, the largest specialty retail jeweler in the US and the UK, said Thursday that second-quarter year-over-year sales increased 3.1 percent to $880.2 million. Same store sales for the period increased 3.6 percent year-over-year while eCommerce sales grew 7 percent to $31.2 million.

This was offset by a 1.2 percent decline in net income to $67.4 million. During a conference call Thursday, Mike Barnes, Signet CEO, said the decline was primarily due to the costs associated with the acquisition of the Ultra outlet jewelry store chain and the conversion of many of them to Zale Outlet stores, and lower gross margins compared to other Signet holdings. Without Ultra, earnings per share were up 5.9 percent.

In the company’s US division, which now accounts for nearly 85 percent of total sales for the company, sales increased 5.6 percent to $741.1 million. Same store sales increased 4.9 percent for the period. Sales increases were driven by strength in bridal, colored diamonds and watches. Signet owns 1,449 jewelry retail stores that operate under the brand-names Kay, Jared, Kay Outlet stores, Ultra and stores and some regional brands.

Kay and Jared experienced increases in both transaction counts and average transaction value. Meanwhile, eCommerce sales increased 36 percent to $25.3 million.

In the UK division, total sales declined 8.5 percent to $139.1 million in the second quarter. Same store sales decreased 2.4 percent. The company said the sales decline was primarily due to a same store sales decrease of $3.4 million, the impact of closed stores of $5.6 million and currency fluctuation of $3.9 million. Signet owns 500 retail stores that operate under the H.Samuel and Ernest Jones names.

The company said that at Ernest Jones, the number of transactions increased driven primarily by strength in branded bridal and watches, excluding Rolex, and the average transaction value was lower, primarily due to the impact from Rolex being offered in fewer stores. In H.Samuel, the number of transactions declined, primarily due to store closures and lower traffic. This resulted in lower sales across many merchandise categories, partly offset by strength in branded bridal products. Sales in both businesses were impacted by lower bead transactions. UK eCommerce sales in the UK increased 5.4 percent to $5.9 million, which include 45 percent coming to the websites through mobile devices, Barnes said.

Barnes noted during the conference call that Signet is in the process of updating its websites and mobile presence to take advantage of the increased traffic.

Other second quarter highlights:

* Gross margin declined, falling to $309.7 million or 35.2 percent of sales, compared to $311.2 million or 36.4 percent of sales in the second quarter fiscal 2013. The includes the results for Ultra increased gross margin dollars by $5.7 million; however, it reduced the consolidated gross margin rate by 50 basis points and the US gross margin rate by 70 basis points. The Ultra gross margin is lower than the core US business due to lower Ultra store productivity and the impact of the Ultra integration.

* Gross margin dollars in the US increased by $1.3 million compared to second quarter of fiscal 2013, reflecting higher sales offset by a gross margin decrease of 180 basis points. The company said the lower gross margin was primarily attributed to a gross merchandise margin decrease by 50 basis points, attributed to Ultra; and store occupancy and operating costs deleveraged by 70 basis points, of which 40 basis points was due to Ultra. The remaining 30 basis point change was due to the increase of new store openings.

* The US net bad debt ratio increased to 4.9 percent of sales compared to 4.5 percent of sales in prior year second quarter. The increase in the ratio was primarily due to the growth in the outstanding receivable balance. In addition, the US division experienced a “slight decline in collection efficiency” and a change in the credit mix. In the UK, gross margin dollars decreased $2.8 million, primarily reflecting the impact of decreased sales and currency fluctuation offset by a gross margin rate increase of 40 basis points.
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* Selling, general and administrative expenses increased 4.2 percent to $250.5 million. As a percentage of sales, SGA increased by 40 basis points to 28.5 percent. This includes the results for Ultra, which increased SGA by $13.5 million and increased the consolidated SGA rate by 70 basis points. The company said Ultra’s SGA is expected to decline as the final steps of the integration are completed.

* Operating income fell 4.9 percent to $105.5 million. Operating margin declined 100 basis points to 12 percent.

* The US division’s operating income including Ultra declined 4.9 percent to $111.5.

* Operating margin for the US division including Ultra was 15 percent, compared with 16.7 percent in fiscal 2013, down 170 basis points. Excluding Ultra, the US division’s operating income was $119.3 or 16.8 percent of sales, up 10 basis points.

In its guidance, the company said it expects same store sales to rise in the low-single digit for the third quarter.

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Royal China for the Royal Baby Available for Purchase

The official trust of the royal family has released a set of china commemorating the new son of Prince William and Catherine, Duchess of Cambridge.

Royal Collection Trust presented the official range of china Wednesday and has made it available for preorder. The items are decorated with scrolls incorporating the name and birth date of their son (who has reportedly been given the title of Prince of Cambridge), with the lion and unicorn from the Royal Arms supporting the coronet of the duke and duchess of Cambridge, surrounded by oak leaves from the Middleton coat of arms.

The four-piece set was be made in Stoke-on-Trent, a pottery center in Staffordshire, England, by the same potteries that produced the official china celebrating the marriage of The Duke and Duchess of Cambridge in 2011, and marking The Queen’s Diamond Jubilee in 2012 and the 60th anniversary of the Coronation this year. Using methods and techniques that have remained unchanged for 250 years, every item is hand-made from fine bone china and gilded in 22K gold before being gift-wrapped in tissue paper and boxes designed for the occasion.

The items include a pillbox for 30 British pounds ($46), a small loving cup for 39 pounds ($60), a dessert plate for 45 pounds ($70) and a limited-edition loving cup for 195 pounds ($300), of which 2,013 will be produced. Three of the items are pictured above.

All profits from the sale of the china are dedicated to The Royal Collection Trust, a registered charity. The Royal Collection is one of the largest and most important art collections in the world, and one of the last great European royal collections to remain intact. It is held in trust by The Queen as Sovereign for her successors and the nation. It is not owned by her as a private individual. The aim of The Trust are the care and conservation of the Royal Collection, which receives no public funding, and the promotion of access and enjoyment through exhibitions, publications, loans and educational programs.

“The range is contemporary in style, while maintaining the traditional formality of royal commemorative china,” said Nuala McGourty, Royal Collection Trust’s retail director. “The design also makes reference to the heritage of both parents.

The china can be preordered online by following this link.  

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Royal Gifts For Royal Babies Past

The Portland Font, a private christening basin commissioned by William Bentinck, third duke of Portland , for the birth of his first grandson in 1796. Photo credit: British Museum

Tradition is very much a part of Britain’s Royal Family but when it comes to newborns the practice of gift giving has a lot of leeway, said Geoffrey Munn, one of Britain’s foremost authorities on antique jewelry.

“In the past there’s been a whole range of things given to high ranking royal babies,” Munn said Monday from Wartski, where he serves as managing director. The antique dealership has a “royal warrant of appointment,” making it one of a handful of jewelers that supply goods and services to the royal family.

From the beginning of the royal monarchy to the early part of the 20th Century, baby deaths were a common occurrence, even among royal families. Because of this, a popular gift to a royal newborn in past centuries was a gold rattle with a handle made of red coral.

“The coral was used as a talisman to keep away evil spirits,” Munn said. “Some people adhere to it now with the use of a red silk, but it’s a very, very, ancient thing.”

Gifts to newborns are often conservative, Munn said. A small string of pearls for a girl and cufflinks for a boy were common gifts. The more elaborate gifts were reserved for the christening, the most important moment in a royal infant’s life. Again, in the past baptisms were done as quickly as possible because of the high chance of infant deaths. Of course, they are still done while the baby is an infant.

“The baptismal is a crucial part of an existence of a child and a royal child even more so,” Munn said. “Until the 17th Century its offspring was thought to be there by divine right, and thought to be chosen by God. Then the baptism was even more crucial.”

For the royal baby who has everything probably the most elaborate christening gift is the personal baptismal font (basin). They were often kept in the possession of families to be used for generations. The only known example of a private basin is on view at the British Museum: The Portland Font (top photo). It was commissioned by William Bentinck, third duke of Portland (1738-1809) for the birth of his first grandson in 1796.

The detachable bowl of the gold and marble basin rests on four winged cherub feet, surrounded by three free-standing sculptural figures representing the Cardinal Virtues. These are: Faith (standing with a cross and her hand held over the bowl in the act of benediction), Hope (seated, holding a symbolic anchor) and Charity (seated and shown comforting children). It was designed by Humphrey Repton and built by Paul Storr, one of the best known goldsmiths in London.

Christie’s London held an auction in November 2009 of “Property From the Late Duke and Duchess of Kent and Families,” which gave other examples of the types of gifts given at christenings. 

Austrian-made silver gilt service was given in 1907 to Princess Marina of Greece and Denmark, who would become the Duchess of Kent. The gift was from Princess Thayer of Hanover and Duchess of Cumberland. Photo Credit: CHRISTIE'S IMAGES LTD. 2013

For example, a tasteful Austrian-made silver gilt service was given as a christening gift in 1907 to Princess Marina of Greece and Denmark, who would become the Duchess of Kent. The gift was from Princess Thayer of Hanover who was also the Duchess of Cumberland. The tapering on the beaker and the flatware are stamped with husks and shells. The set consists of a tablespoon, teaspoon, fork, a knife with silver-gilt blade, and a knife with steel blade. Each piece is engraved with the initial M below a Royal crown. The leather covered case was marked with J.C. Klinkosch, Vienna, dated 1907 with Imperial Warrant. The inscription reads “from Great Aunt Thyra 1907.” 

George VI silver flatware set given in 1942 to Prince Michael of Kent. Photo Credit: CHRISTIE'S IMAGES LTD. 2013

An even more modest example of a christening gift was given in 1942 to Prince Michael of Kent. It was a George VI silver flatware set of a fork, knife and spoon with facetted plain handles in a fitted case with an inscribed note. It was made by London silversmiths, Wakely and Wheeler. It sold at auction for 525 pounds ($806).

A personally inscribed Victorian silver gilt cup and cover from King Edward VII and Queen Alexandra in 1903 for their grandson, Prince George, Duke of Kent. Photo Credit: CHRISTIE'S IMAGES LTD. 2013

A more elaborate christening gift came from King Edward VII and Queen Alexandra in 1903 for their grandson, Prince George, Duke of Kent. It was a Victorian silver gilt cup and cover with an inscription that reads: “To George Edward Alexander Edmund 4th Son of George, Prince of Wales and Victoria Mary, Princess of Wales from his Grandparents and Sponsors King Edward VII and Queen Alexandra at his Christening at Windsor Castle January 26th 1903.”

Shaped like an inverted bell, it is adorned with scroll handles and a detachable cover with baluster finish. A silver medallion depicts King Edward VII and Queen Alexandra. It has the mark of Elkington and Co., London, 1900.

Munn said that engravings that appear handwritten, such as what is on the gilt cup, are popular among royalty and is a common service of jewelers used by the royal family, including Wartski.

“What we usually do is engrave small cups of silver and that can be done in the facsimile of the parents handwriting,” he said. “Every generation of royalty has enjoyed facsimile of handwriting. It’s a very interesting procedure, taken up by the great jewelers. They all know how to do it.”

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