Signet Jewelers To Acquire Blue Nile For $360 Million In Cash

2022-08-13 02:07:31 By : Mr. Jordan Zhu

Signet Jewelers, one of the world's largest fine jewelry retailers, said Tuesday that it has signed an agreement to acquire online fine jewelry retailer, Blue Nile, Inc., for $360 million in an all-cash transaction. Signet, in a statement, says Blue Nile delivered revenue of more than $500 million in 2021.

Signet Jewelers, based in Akron, Ohio, currently owns the jewelry brands, Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct,, in the U.S.; Peoples, H. Samuel, Ernest Jones in the U.K.; and the jewelry subscription service, Rocksbox. The company did not immediately respond to additional questions from Forbes.

Calling it a “strategic acquisition,” Signet in its statement says that adding Blue Nile to its portfolio “accelerates Signet's efforts to expand its bridal offerings and grow its ‘Accessible Luxury’ portfolio while extending its digital leadership in the jewelry category.” The company adds that Blue Nile’s customers are younger, more affluent, and ethnically diverse which will broaden its customer base. Blue Nile will be “positioned at the top tier of Signet's Accessible Luxury banners along with Jared, James Allen and Diamonds Direct.”

“Blue Nile is a pioneer and innovator in online engagement rings and fine jewelry, providing a unique and highly desirable shopping experience for customers,” Virginia C. Drosos, Signet CEO, said in the statement. “Adding Blue Nile to our strong and diversified portfolio of banners will further drive our ‘Inspiring Brilliance’ growth strategy - expanding customer choice, building new capabilities, and achieving meaningful operating synergies that will increase value for both our consumers and shareholders.”

Gina Drosos, CEO of Signet Jewelers Ltd., during an interview in New York, U.S., on March 21, 2022. ... [+] Photographer: Christopher Goodney/Bloomberg

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

Signet says the transaction will be funded with cash on hand and is currently expected to close in the third quarter of fiscal year 2023. Regulatory filings were made in July and the applicable waiting period has passed. However, the transaction is still subject to other customary closing conditions.

Blue Nile was founded in 1999 by Mark Vadon after he had a less than satisfying experience shopping for a diamond engagement ring through traditional retail routes.

The company was created during the infancy of the Internet with the premise that choosing an engagement ring can be a simple process and can be done online. Education and disclosure helped consumers make informed decisions when choosing a diamond engagement ring. Within 10 years it became one of the largest diamond and diamond engagement ring retailers in the U.S. and one of the early high-growth eCommerce darlings.

Blue Nile was acquired in 2017 by an investor group comprised of Bain Capital Private Equity, Bow Street and Adama for approximately $520 million.

Separately, Signet is downgrading its guidance for the second quarter and its full year fiscal 2023 due to “heightened pressure on consumers’ discretionary spending and increased macroeconomic headwinds.” Preliminary second quarter total revenue is expected to be approximately $1.75 billion and non-GAAP operating income is expected to be approximately $192 million.

The company’s new Fiscal 2023 estimates are total revenues of approximately $7.60 billion to $7.70 billion and non-GAAP operating income to be in the range of $787 million to $828 million. This compares with prior fiscal 2023 guidance for total revenue of $8.03 to $8.25 billion and non-GAAP operating income of $921 to $974 million. This revised Fiscal Year 2023 outlook does not include the pending Blue Nile acquisition.

“We saw sales soften in July as our customers have been increasingly impacted by rapid inflation, so we're revising guidance to align with these trends,” Drosos said. “I’m pleased that revised guidance positions us up ~25% in revenue versus the FY20 pre-pandemic period. In addition, our transformed operating model and strong balance sheet give us dry powder, even in a down market, to invest in market share expansion as we are doing organically in our banners and with the acquisition of Blue Nile. We believe this acquisition brings additional value, capabilities, and further growth potential to our Company.”

“While our initial guidance for FY23 anticipated the impact of stimulus in the base period and the level of inflation that we were seeing at that time, we have seen a further deterioration in consumer spending, including at higher price points, in July,” said Joan Hilson, Signet chief financial and strategy officer. “Assuming this trend will persist in the back half of the year, we are modestly reducing our FY23 guidance. Importantly, our outlook continues to reflect a double digit annual operating margin based on the strength of our transformed business model.”