Signet Jewelers is buying off-mall jewelry chain Diamonds Direct USA for $490 million in an all-cash deal.
The company, which owns Kay Jewelers, Zales and Jared, has also raised its sales outlook for the third quarter and the rest of the year. Signet credits the projected increase in sales to growing demand ahead of the holiday season as well as continued pent-up demand as many consumers had put their engagement and wedding plans on hold last year.
“Customers are showing positive response to our new product launches, and the reduction in government stimulus and customer shift to spending on entertainment and travel are having less impact than we previously anticipated,” said Chief Financial Officer Joan Hilson.
Signet is also benefitting from not having to deal with supply chain disruptions — a problem that is significantly impacting other retailers. The company planned ahead and received holiday products earlier this year and it relied on air freight for the bulk of its merchandise, which helped it avert the issues arising from ocean freight congestion.
The company now expects its Q3 revenue to be in the $1.42 billion to $1.45 billion range, up from its previous projected range of $1.26 billion to $1.31 billion. Overall, the company expects its annual revenue to be in the $7.04 billion and $7.19 billion range, marking an improvement over its previous guidance of $6.80 billion to $6.95 billion.
The increase in sales and the company’s acquisition of Diamonds Direct USA come at a time when the company is putting a focus on streamlining its business. Signet has plans to close more than 100 locations in 2021 and open another 100 under its Banter by Piercing Pagoda brand.
Signet’s announcement sent its shares more than 5 percent up in early trading hours Tuesday.