The biggest jewelry chain in the world is giving up on America's dying shopping malls
- Shopping malls have lost their luster for Kay, Zales, and Jared stores.
- Signet Jewelers, the parent company of the trio of jewelry outlets, announced in its latest earnings report on Wednesday that it plans to close 150 stores over the next year, with a special focus on mall locations.
- "Signet is too highly exposed to lower performing malls," a Signet spokesperson told Business Insider.
- It's just the latest sign that the American shopping mall is an endangered species.
Signet Jewelers, the jewelry giant that owns all three retailers, announced in its latest earnings report on Wednesday that it plans to embrace a strategy of limiting new store openings to "off-mall locations." It plans to close 150 stores over the next year, with a special focus on mall locations.
"Signet is too highly exposed to lower performing malls, so we are being highly disciplined in evaluating our store performance and decisions on which stores to close will be economically driven and based on the profitability and potential of each store including our ability to renegotiate leases at favorable rates," a Signet spokesperson told Business Insider in a statement.
Signet, the largest jewelry retailer in the world, has had its struggles. This latest report notes that the company closed 262 stores in fiscal year 2019, and the upcoming closures are part of its plan to "strategically reduce and reposition its real estate footprint to increase store productivity."
By fiscal year 2020, the company plans to have cut its store base by 13% in three years.
"We are highly focused on sales retention," the Signet spokesperson said. "This is enabled by the fact that approximately 75% of the stores we are closing are in malls with another Signet banner store, often across the hall."
But Signet's strategy also speaks to the decline of the American shopping mall.
The jewelry company's report notes that going forward, it expects to launch a "limited" number of new store openings "primarily consisting of repositions to off-mall locations."
In other words, this retailer is practically fleeing the mall. This news comes as shopping malls across the US continue to sputter and shutter thanks to declining foot traffic and the rise of online shopping.
Signet reported that it's hoping to save between $200 million and $225 million as part of its transformational "path to brilliance" plan. But that sum doesn't include the savings from store closings and the company's new anti-shopping mall drive.
Here's the full statement from Signet:
The company continues to strategically reduce and reposition its real estate footprint to increase store productivity and allow for more focused, impactful investments in compelling, digitally enabled new store designs, as well as targeted store appearance updates across the portfolio. In Fiscal 2019, the company closed 262 stores. In Fiscal 2020, the company expects to close more than 150 stores, with limited new store openings primarily consisting of repositions to off-mall locations. By the end of Fiscal 2020, the company expects it will have reduced its store base by 13% over a three-year period.
We are being highly disciplined in evaluating our store performance and are considering a number of factors including store profitability, lease length and our ability to renegotiate leases at favorable rates. The closures will be primarily mall based as well as continuing to exit regional banners, and the majority of store closings will occur late in the fiscal year, post-holiday.
As for the strategic rationale for closing doors, we believe that jewelry will continue to be an omni-channel category and that the right store footprint is a competitive advantage for us. Signet is too highly exposed to lower performing malls, so we are being highly disciplined in evaluating our store performance and decisions on which stores to close will be economically driven and based on the profitability and potential of each store including our ability to renegotiate leases at favorable rates.
We are highly focused on sales retention. This is enabled by the fact that approximately 75% of the stores we are closing are in malls with another Signet banner store, often across the hall. We expect to achieve greater productivity per square foot through a smaller footprint as we increase our mix toward A&B malls. We are in the process of developing and testing several new customer-inspired store designs in FY20 with potential for expansion in FY21 and beyond.
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