The oil crash has hurt sales of a lot of things that aren’t related to oil.
And on Thursday, Signet Jewellers said weakness in energy-dependent areas was responsible for half of its sales decline in North America.
The company reported second-quarter earnings and provided guidance for the third quarter that missed analysts’ expectations.
Across stores, which include Kay Jewellers and Jared, sales at locations open for at least one year — comparable-store sales — fell 2.3%.
This missed its own previous forecast for 1%-2% growth, and analysts’ expectation for 1%, according to Bloomberg. Adjusted earnings per share totaled $1.14, well off the median forecast for $1.45.
In response, Signet shares tumbled by as much as 13%.
“Our stores and states and provinces closely tied to the energy industry dramatically underperformed the division averages. It didn’t matter the store banner, the price point, or the merchandise brand. It was an obvious across-the-board trend.
Sales especially has a large presence in Texas … underperformance was clear in other places like Louisiana, Oklahoma and Alberta, Canada. Net-net, energy regions accounted for approximately half of our comp. decline within North America.”
As we noted with Popeyes’ fried chicken, Del Frisco’s steaks, and Harley-Davidson bikes, several companies say consumers in energy-heavy areas are spending less. Some of their customers may have been affected in mass layoffs by energy companies, while others may be cutting spending in anticipation of more weakness in their local economies.
Light also cited weakness across the industry for the sales decline. This was reflected in MasterCard spending polls that showed a slowdown in jewellery sales during the second quarter, he said.
It’s possible that some bad publicity for the company also hurt sales. According to a BuzzFeed story in late-May, Kay Jewellers was returning engagement rings customers sent for repair worse than they had been. And on June 1, Grant’s Interest Rate Observer released a report that raised questions about Signet’s accounting practices.
“We don’t believe that the publicity overhang is really affecting our business, but it’s hard to understand specifically if it is or not,” Light said.
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