Signet Jewelers Ltd., whose brands include Kay Jewelers, Zales and Jared, is closing all of its North American stores amid the COVID-19 crisis.
Store employees “will receive pay and benefits through April 4, 2020 in a combination of base pay and available paid time off provisions, at which time we will further assess the situation,” CEO Virginia C. Drosos said in a press release.
“We will continue to follow the guidelines of government and health officials in determining when we will reopen our stores.”
She added: “Retailers are already experiencing the severe impact of the impact of COVID-19 on the global economy, and we are anticipating continued reduction in consumer spend. We are moving quickly and aggressively to strengthen Signet’s financial flexibility, prioritize investments, and reduce capital expenditures and operating expenses. This will include implementing reduced work hours, furloughs and reduced compensation across store and support center teams as we navigate this unprecedented environment.”
The closings were effective as of March 23. In addition to Kay, Zales and Jared, Signet’s brands include James Allen, Peoples and Piercing Pagoda.
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Here are further details from the company’s press release:
OmniChannel & Ecommerce
Our teams continue to work tirelessly to help our millions of customers Celebrate Life and Express Love. To this end we have made strategic investments in our eCommerce platforms resulting in enhanced online customer shopping experiences. For all of life’s most meaningful moments, from birthdays to engagements, Signet’s online platforms and channels remain open:
Increasing Financial Flexibility
As a prudent measure to increase Signet’s financial flexibility and bolster its cash position, the Company elected to access an additional $900 million from its senior secured asset-based revolving credit facility. At the time of drawdown on March 19, the Company had more than $1.2 billion in cash and an additional $292 million available on this asset-based revolving credit facility.
The asset-based revolving credit facility is subject to a fixed charge coverage ratio if availability under the facility falls below 10% of the borrowing base or $100 million whichever is higher. The Company’s most recently reported borrowing base under the asset-based revolving credit facility is approximately $1.4 billion. The Company’s senior unsecured notes due in 2024 are not subject to financial covenants.
The Company is aggressively reducing capital expenditures, prioritizing investments in flexible fulfillment and digital initiatives, and reducing operating expenses, as well as focusing on inventory discipline. This will include implementing reduced work hours, furloughs, and reduced compensation across store and Support Center teams including executives and Board of Directors.
Fiscal 2021 Outlook
As announced on January 16, 2020, Signet’s holiday period same store sales were up 1.6%, with North America same store sales up 2.0% and eCommerce sales up 13.5%. The Company will report its final fourth quarter and fiscal year 2020 results on Thursday, March 26, 2020. Signet will provide an update on first quarter sales trends to date but will not provide guidance for first quarter or full year Fiscal 2021.
