Signet Jewelers to buy online platform Blue Nile for $360 million in cash

Signet Jewelers Ltd. (NYSE: SIG), based in Akron, is bolstering its digital presence with the acquisition of online jewelry platform Blue Nile in a $360 million all-cash deal.

Signet said in a Tuesday, Aug. 9 press release that the deal accelerates its efforts to expand its wedding offerings and develop a portfolio the company calls Accessible Luxury. Blue Nile also “brings in an attractive customer base that is younger, more affluent and ethnically diverse, which will expand our customer acquisition funnel,” said Signet, the parent company of Zales, Jared and Kay Jewelers, between others, in the press release.

The transaction will be funded with available cash and is expected to close in Signet’s third quarter of fiscal 2023. Signet said in the release that while “synergies are expected to begin to materialize as early as the fourth quarter of fiscal 2023,” the acquisition “is unlikely to be accretive” until the fourth quarter of fiscal 2024.

Blue Nile posted revenues of more than $500 million in calendar year 2021, Signet said.

Signet CEO Virginia C. Drosos in a statement called Blue Nile “a pioneer and innovator in online engagement rings and fine jewelry, providing a unique and highly desirable shopping experience for consumers.” clients”.

Blue Nile CEO Sean Kell added, “By joining Signet, we will expand our premium brand and fine jewelry offering to millions of new customers while bringing new capabilities to our core e-commerce business which will will generate additional growth opportunities for Blue Nile.

Signet was able to buy Blue Nile when another deal apparently fell through.

CNBC reported that Blue Nile and special purpose acquisition firm Mudrick Capital Acquisition Corp. earlier this year “said they had agreed to combine in a deal that would see the jewelry brand go public through a SPAC. The merger valued the combined business at both $873 million. And that would have marked Blue Nile’s return to the public markets.(In 2016, Blue Nile was taken private by Bain Capital Private Equity and Bow Street, a private investment firm, in a $500 million deal. )

However, CNBC noted, a person familiar with talks between Mudrick and Blue Nile “stated that their exclusivity window was about to expire. Additionally, that person added that Bain was eager to pull out of the deal.” company money and Signet had already approached Blue Nile last year about an acquisition.”

Separately, Signet cut its financial guidance for the second quarter and fiscal year 2023, the result of what it called “increased pressure on consumer discretionary spending and increased macroeconomic headwinds.”

Signet said in the statement that it expects second-quarter revenue of about $1.75 billion and non-GAAP operating profit of about $192 million. The company said it now expects fiscal year 2023 sales to be between $7.6 billion and $7.7 billion, down from earlier guidance of a range of 8.03. billion to $8.25 billion.

The company said it expects non-GAAP annual operating profit in the range of $787 million to $828 million, down from a previous guidance of $921 million to $974 million. of dollars.

Drosos said in the statement that Signet “saw declining sales in July as our customers were increasingly impacted by rapid inflation, so we are revising our guidance to align with these trends.”

Yet, she added, “Our transformed operating model and strong balance sheet give us dry powder, even in a bear market, to invest in expanding market share as we do organically. across our banners and with the acquisition of Blue Nile. We believe the acquisition brings additional value, capabilities and growth potential to our business.”

Shares of the company as of 10:49 a.m. Tuesday were trading at $58.12 per share, down about 14% from the Monday, Aug. 8 close. The stock’s 52-week high is $111.92; its 52-week low is $48.30.

Signet operates approximately 2,800 stores primarily under the brands Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, JamesAllen.com, Peoples, H. Samuel, Ernest Jones, and jewelry subscription service, Rocksbox.