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Signet Raising Eyebrows With ‘Subprime’ Lending Practice, Unusual Accounting Method

Falling stock price reflects investors’ concerns.

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Signet Jewelers has increased its reliance on financing, taking on consumer loans that bankers may view as subprime debt, as Bloomberg reports. The article explains how the retailer is “building its business by expanding credit offerings to existing customers and identifying people it considers good credit risks who might be rejected by other lenders.” Analysts are also wary of an accounting method that the company uses which could underestimate future losses in light of this lending practice.

Signet, the article adds, stands by its approach, pointing to its track record of managing loans without major losses and attributing that record to “robust credit standards.” In a statement responding to questions from Bloomberg, the company said: “In the U.S. market, offering financing benefits our guests and managing the process in-house is a strength of Signet’s Sterling Jewelers division.”

Regardless, the retailer’s falling stock price reflects concern among investors. Since its stock closed at $150.66 on Oct. 30, 2015, the price has dropped more than 30 percent.

Read more at Bloomberg

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