Consumer

Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

Signet Jewelers Ltd., the corporate parent of Kay Jewelers and Zales, has lost much of its sparkle in the past couple of years.

The company on Monday took an important step toward reclaiming it: naming a new CEO, Virginia C. Drosos. She will replace Mark Light, who had held the top job since 2014, but whose career at Signet spanned more than 35 years. The company said Light is retiring "due to health reasons."

The change is a potentially pivotal shake-up for a company that badly needs one.

Last year, Signet faced allegations it was systematically swapping diamonds from jewelry brought into its stores for repair, sending customers home with cheaper stones than they had originally purchased. Though the company has strongly denied these claims, the accusations still ping-ponged around social media and likely bruised its reputation.

And sworn statements in an arbitration case released earlier this year show Light has been accused of inappropriate sexual behavior toward female employees. This claim was unearthed in a class-action case in which hundreds of former workers said there was a pattern of sexual misconduct at the company. (Signet has denied wrongdoing.)

Replacing Light is an effective way for Signet to show employees and investors it wants to move forward and is serious about fixing a troubling workplace culture.

It's also an opportunity to bring fresh eyes to a business that clearly needs new direction.

A Not-So-Shiny Object
Signet's stock has tumbled in the past year
Source: Bloomberg

Signet's stock has been slammed this year, partly because investors are likely squeamish about its ability to ride out the scandals. But distress in its core jewelry businesses has contributed, too.

From Bad to Worse
Signet's comparable sales have been declining
Source: Bloomberg

Signet's sales have been battered by several problems. It is saddled with a huge fleet of stores, many of which are in malls where foot traffic is sliding and other tenants are failing or fleeing. The company has said a steady stream of deep discounts by its competitors has put it in a tough spot: Signet can either watch customers flock to rivals offering eye-popping prices, or it can join the fray and watch margins suffer.

And the company doesn't exactly have its foot on the gas in its digital business. Sales in that channel rose just 1.1 percent in the first quarter from a year earlier, a paltry increase in what should be a high-growth area.

It is true jewelry is more insulated from the rise of online retailing than, say, clothing or electronics. Engagement-ring shoppers are typically making one of the most personal and high-ticket purchases they'll ever make. It stands to reason many of them want to see the goods in person.

But with Blue Nile Inc. aggressively pursuing the digital corner of the market, it is still important for Signet to do more to position itself as a serious player there.

It remains to be seen whether Drosos is the right choice to shine up the jewelry behemoth. She has plenty of experience in the consumer sector, having spent more than 25 years at The Procter & Gamble Co. But it is unclear how that résumé will translate into selling bling. Peddling pantry staples and personal-care items is more about edging out competition with attractive prices and finding ways to make a habit of buying a given product.

Kay, Zales and Signet's other jewelry chains are a very different kind of business. Signet is not a retailing empire built on amassing a base of frequent, regular shoppers, but one that relies heavily on customer service and the creation of an aspirational in-store experience.

Still, Drosos has been on Signet's board of directors since 2012, and she has served on its sub-committee focused on customer experience. That should help her hit the ground running. It's a good thing, too, because Signet needs help right away. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Sarah Halzack in Washington at shalzack@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net