The owner of Kay Jewelers and Zales has agreed to buy Diamonds Direct USA Inc. from Blackstone Inc. and other shareholders for $490 million, betting on a robust return of the U.S. bridal business as pandemic restrictions subside.
The cash deal will add 22 stores and 500 employees to Signet Jewelers Ltd.’s network. It will also bring higher-end bridal customers who typically spend more on engagement rings and other wedding accoutrements than shoppers at the company’s other brands, according to Chief Executive Officer Gina Drosos.
“We are always looking for opportunities to grow our business,” she said in an interview. The company also boosted its sales forecast Tuesday.
The deal bolsters Signet’s strategy to expand its 7% market share in the fragmented jewelry business — and helps it capitalize on the expected boom in marriages that were delayed by the pandemic. The company, which also owns the Jared chain, said earlier this year it hoped to boost annual sales to $9 billion in the coming years, a goal Drosos reiterated.
Diamonds Direct is a Charlotte-based direct-to-consumer retailer specializing in engagement rings, wedding bands and high-end jewelry. The company was acquired by Blackstone in 2015 for an undisclosed amount.
The Signet deal is expected to close in the fourth quarter of the fiscal year.
Signet raised its revenue forecast to as much as $7.19 billion in fiscal 2022, an increase of $240 million from the high end of the prior range. Same-store sales, a key gauge of retail performance, will rise as much as 38%, compared with a prior forecast of no more than 33%.
The company raised the outlook in part because executives said they’re feeling bullish about the holiday season, with plenty of merchandise already in store. Signet ships the majority of its inventory via air freight, which has allowed the company to avoid the snarls in shipping supply chains that are plaguing many other retailers, Drosos said.
Signet put in requests with suppliers a month earlier, on average, than the company typically would.
“We got way out front of placing our orders,” Drosos said. “We’re excited about the holiday season.”
Another reason for the upbeat outlook is that consumers are continuing to spend on jewelry and not shifting their spending to other experience-based activities as much as initially expected, Chief Financial Officer Joan Hilson said.