What most shoppers in the mall don’t realize is that the ubiquitous giant jewelry chain in the United States has a different target group. Zales, for example, focuses on fashion and trends as well as personal gifts, the kind of accessories one might wear to the office or to a normal neighborhood gathering. People are more likely to visit Kay if they want to buy something out of the ordinary, for example as a gift for a major celebration such as an anniversary or engagement. If people bumped up their shopping budget significantly and set their sights on quasi-luxury jewelry, willing to spend $3,000 or more, they might leave the mall and head to nearby Jared, which sells high-end jewelry.
Also less known to most shoppers is that all three chains (each with hundreds of stores across the U.S.) are owned by the same company, Signet Jewelers. Headquartered in Ohio, USA, the jewelry retail giant was founded in Bermuda. Longtime Signet director and consumer-goods veteran Gina DeRousos, who became CEO in 2017, owes a lot to the company’s comeback.
It should be emphasized that De Rossos always wore Zales jewelry during the Zoom conference call with reporters. “I really appreciate the idea of jewelry as a fashion item, and the way people layer and layer different pieces,” Derosos said in a slightly southern drawl, explaining as she stroked the three gold necklaces she wore around her neck. , Zales’ consultant provided her with outfit suggestions, because she hopes that the jewelry she wears can take into account fashion and career.
The Signet empire may not have always been fashion-forward, but Signet is stronger today than it was in the past since De Rossos, the company’s first female CEO, took the helm. Not so long ago, Signet’s three chain brands didn’t even know their own target groups. Indeed, since Signet’s trough in the 2010s, its three largest brands have begun to involute and their respective differentiating features have all but disappeared. At the time, any promotion at Zales would have led to a decline in Kay’s business, Drosos recalls. This problem is exacerbated by the fact that the chain stores of these brands are usually in competition with each other and are located in close proximity in the same level of shopping malls. “The brands we have are basically at war with each other in the mid-market,” De Rossos said.
Signet’s three top brands account for 77 percent of the company’s sales, and clearing out their respective positions is just one more task on the CEO’s long to-do list. Although Signet is the largest specialty jeweler in the United States, the company faced serious problems when De Rossos took over. Zales, the brand Signet acquired in 2014, was a trap, with the retailer heavily indebted and riddled with underperforming stores, unloved by customers and suppliers alike. Signet’s balance sheet is weighed down by its in-store credit card business, and its e-commerce business is largely a showpiece. To make matters worse, the company was exposed to a large number of sexism and sexual harassment cases, the impact of which eventually led to the departure of Drosos’ predecessor.
So far, Drosos’ plan to reshape Signet has been moderately successful, a strategy that stems from her decades of experience at Procter & Gamble and her stint as chief executive of a genetic-testing start-up. Executive resume. Signet has shuttered hundreds of ailing Kay and Zales stores and reduced its reliance on discounts while selling its credit card business. Thanks to the acquisition of retail site Blue Nile in 2022 and rental service Rocksbox, it’s finally catching up with the e-commerce age. De Rossos has already set out to change Signet’s culture. She has done this by ensuring that terrified employees, especially women, feel heard, engaged and willing to believe in management’s vision, and she has overhauled the board.
Signet’s sales hit $7.8 billion in 2021, up 22% in Biedrosos’ first year in office, up 50% from his trough during the new crown epidemic, and hitting new highs. In mid-December 2022, Signet’s third-quarter sales and profits beat expectations, bolstering Derosos’s claim to success.
At the same time, Signet’s challenges can be described as one after another. Sales have been hit by inflation as customers cut back on jewelry, making discretionary spending seem to evaporate. Kay, Zales, and even Jared’s consumer groups are not the same as Tiffany (Tiffany), let alone Cartier (Cartier). After all, this group of people is unlikely to spend a lot of money on jewelry in bad times. Wendy Liebman, chief executive of WSL Strategic Retail, said: “The low-end jewelry market in the United States has experienced tremendous pressure. We have come out of the shadow of the new crown epidemic, but we are trapped in inflation. Do you need jewelry?'”
The holiday season has answered that question early: 30% of Signet’s annual sales typically come in November and December. However, whether the jewelry-buying crowd is nervous, confident, or somewhere in between, Signet still has a lot of work to do, and Wall Street doesn’t expect Signet’s sales to grow for the next two years. , Signet has a long way to go.
De Rossos’ plan will have to focus on: winning more market share by outperforming its rivals; further diversifying the business; and continuing to focus on e-commerce to prevent it from stagnating again. “The old ways we used to do it worked in the last decade,” De Rossos said. “We were more commodity-focused and partnered with suppliers rather than listening to consumers.” The problem was that new strategies and Whether the new culture can allow Signet to gain a firm foothold in a choppy market.
The largest jeweler still has room to grow
Signet’s battleground is a highly segmented market dominated by small regional chains and independent dealers. Although the company is the largest jeweler in the United States, its share accounts for only 9.3% of the $76 billion market. The size of the company stems from its 160 years of mergers and acquisitions in the jewelry industry.
Signet’s portfolio originated in H. Samuel, an English jeweler founded in 1862. In the 1980s, H. Samuel was swallowed up by the British giant and US regional chain Ratner Jewelers, which in turn bought Sterling Jewelers around that time. In 1993, Ratner changed its name to Signet. Today, Kay (formerly the mainstay of the Sterling empire), Zales and Jared account for 38%, 22% and 17% of Signet’s total sales, respectively. Signet also acquired Banter by Piercing Pagoda, a permanent fixture in the mall and where countless Americans got their first ear piercings. 6% of Signet’s sales come from the UK and Ireland, 3% from Canada and the remainder from the US.
Thanks to its size, Signet has dominated the market for decades, but like many industry leaders, the company has ossified. In hindsight, the company’s 2014 acquisition of rival Zale Corp. appears to be a classic case of a company spending money to buy organic growth it couldn’t achieve on its own. The deal has created more debt for Signet, and the chain has a large number of brick-and-mortar stores in need of renovation, as well as a high degree of geographical overlap and style overlap with Kay. This strategic question quickly spilled over into sales: Signet’s total sales peaked at $6.55 billion in the fiscal year ended early 2016, but declined over the next five years, and operating profit plummeted as a result. .
It was at this moment that Drosos stepped forward. She has served as a director of Signet since 2012. She worked for Procter & Gamble for 25 years and was promoted to the head of its beauty business. She then ventured into biotech start-ups as CEO of genetic testing company Assurex Health, where she ran the company for four years until it was acquired. Drosos said the experience made her more aware of the role of data in decision-making. That knowledge proved crucial to her new role.
One of the obvious first solutions before her eyes was to cut the number of Kay and Zales chains. Drosos ended up closing 1,250 stores while opening 400 in better locations, mostly involving its two biggest brands, Kay and Zales. In all, she closed 20% of Signet’s brick-and-mortar stores, which now number 2,500 in the U.S.
Drosos also guided its reforms by stepping up research on clients. While consumers have been telling Signet they’re ready to shop online, management hasn’t really taken it seriously. Jewelry shopping is one of the retail industry’s last bastions against e-commerce, an opportunity Signet had previously underestimated. [Tiffany has also been slow to move on e-commerce; since acquiring Tiffany two years ago, LVMH’s first priority has been to turn the luxury jeweler into an e-commerce powerhouse. ]
The new CEO realized that e-commerce was not just about creating a website that facilitated transactions, but also about enabling people to curate their products before they entered the store. One of her first moves as CEO was to acquire JamesAllen.com in 2017, not only because of the site’s massive business, but also because of the technology that promises to disrupt the diamond industry by Generate 360-degree high-resolution images of all gemstones for sale on the site, while also being able to create a virtual showroom that offers buyers tens of thousands of diamonds to choose from. Today, this technique can also be used for Jared and Kay’s website. “Today, people can see diamonds better and more clearly on the website than in a storefront because we can zoom in and show them in high-resolution images,” De Rossos said.
Technology can also help in novel ways, especially when it comes to inventory management. If a ring in the storefront in Fort Lauderdale goes unnoticed, a salesperson in Minneapolis can sell it to a client. All of this means that the turnover of merchandise will become faster, which will bring more new products to the store floor, and the “new style” will attract customers and maintain the profit margin of the business.
Given the magnitude of the threat posed by the COVID-19 pandemic, making e-commerce a business focus has ultimately served the company well. In mid-2020, Signet has been dealing with the fallout of store closures for several weeks in late spring. After all, Zales, Kay and Jared are not essential retailers. Signet is desperate to ensure revenue doesn’t plummet and has accelerated its adoption of virtual sales and curbside pickup to cater to consumers who don’t want to be in close contact with other people. The company’s overall sales fell 15% in 2020, but the experience has provided Signet with some valuable new strength. In 2017, Signet’s online sales accounted for about 5%, and today the proportion has reached 23%.
The acquisition of online jewelry retailer James Allen also reflects a shift in Signet’s M&A strategy. The company has long focused on acquiring brick-and-mortar rivals; today, it’s focusing more on deals that build out its e-commerce presence, or at least acquire new customers. At the center of the move is Joan Hilson, who previously worked for Victoria’s Secret and has worked for Signet since the 1980s. Derosos hired her in 2018 to lead the company’s strategy and finance. director.
One of the big goals of Drosos and Hilson is to address the high leverage on Signet’s balance sheet and boost profitability by cutting costs on Signet’s operating structure. Since 2017, Signet has cut its long-term debt by 80% to $147 million, and the company’s 2021 operating margin of 11.6% is more than double what it was three years ago. This stronger cash flow allows Signet to boldly pursue acquisitions. “This move gives the company the liquidity to expand into markets and allow the company to grow and grow,” Hilson said.
The company acquired Blue Nile, which Derosos had been following for several years. Blue Nile made waves 10 years ago as the first major specialty online jewelry retailer. However, the brand never took off, and its peak annual revenue was $500 million. Signet acquired the company in September 2022 for $360 million in cash, taking over the e-commerce site with an outstanding virtual showroom and a decent young customer base. Signet also completed acquisitions in 2022 of rental company Rocksbox, small franchise chain Diamonds Direct, and various companies that helped Signet provide maintenance and valuation services.
This series of acquisitions has made the giant Signet even bigger. The company’s retail brands have grown from eight in 2017 to 11 today. The phenomenon also raises a new question: whether Signet can keep these brands growing without confusing customers or causing infighting between brands. Retail analyst Liebman said: “The number of these brands is really quite a lot. If you are not careful, it is likely to lead to fragmentation and mutual cannibalization of your own business.” But so far, the company’s three major chain brands Kay , Jared, and Zales all returned to growth again, mainly because Derosos’s team was able to make up their minds to close those stores that should be closed.
Dealing with a Toxic Company Culture
If Signet’s culture is not changed, De Rossos will not be able to achieve Signet’s turnaround. Like many retailers, Signet has long been a company dominated by female employees and customers, but its leadership has been dominated by men. That dynamic became unsustainable when De Rossos was CEO.
The turning point came after a stunning report in the Washington Post in February 2017. At the time, the report said sexual harassment had become a rampant, systemic phenomenon at Signet, with male executives from top to bottom. The report explicitly mentions Mark Wright, a lifelong Signet employee who became Signet CEO in 2014. Among other allegations, reports said Wright was seen at a corporate event in a pool with “naked and half-naked female employees.” Wright and Signet have repeatedly denied the allegation. However, Wright left the company in the summer of 2017, citing unspecified health issues. Meanwhile, other implicated managers have also left. In 2022, Signet settled class-action lawsuits suing the company for gender discrimination in its hiring and compensation systems and paid $175 million to 68,000 current and former employees.
This toxic culture doesn’t just involve rampant misconduct, it also breeds business-wise dictatorship, with male-dominated managers who don’t listen to issues reported by field workers, namely Signet being female-dominated employees. Drosos said she has been driving diversity initiatives for Signet’s workforce and culture since becoming a director in 2012. The board told her to accelerate the move after she became chief executive, she said.
Fixing a culture of fear and risk aversion is extraordinarily difficult. “It’s also one of the things that made me most nervous about taking this job,” says DeRoussos, one of her first moves to integrate diversity and inclusion goals into every manager’s evaluation. indicators, and has a zero-tolerance policy for sexual harassment. “I was going to start from scratch,” she recalls. “I’m not going to make the same mistakes.” Today, 42 percent of employees above the vice president level are women, and at the store level, 76 percent of associate managers and above are women. “This level of share gives all employees a sense of what’s possible in the future,” she noted.
Another important salvage is the devolution of more autonomy and management to the storefront. When Drosos started as CEO, she had team meetings in storefronts and even listened to customer service calls to see what really needed to be improved. “I quickly realized that the culture of the company was basically command and control from the top down,” says De Rossos. The products sold in chain stores have a greater right to speak. This move, combined with the closure of overlapping stores, has helped to boost single-store sales significantly: Average annual sales at Signet stores have increased by 50% compared to before the new crown epidemic.
The successful strategy mirrors Drosos’s own history: During her 25 years at P&G, she says, she has benefited from the support of a responsive executive. She points to her mentor, AG Lafley, the legendary chief executive who led the consumer giant’s comeback in the early 2000s. It was at P&G that taught De Rossos the importance of responding quickly to front-line information. She turned these insights into action and rose to fame for leading the revival of renowned skincare brand Olay.
Armed with in-depth data on the market that made P&G famous, De Rossos saw a market for skin care that existed between luxury high-priced department store brands and low-priced drugstore brands. Olay doesn’t cost more than $10 a single product at Walmart or CVS. “There was a huge void,” she recalls. So she created a $25 moisturizer she says can rival the quality of luxury beauty brand Lamar that sells for hundreds of dollars at Neiman Marcus. Riddle (La Mer) comparable. The gamble paid off: By the time he stepped down, Olay’s annual sales had grown to $2.5 billion, up from $250 million when he started. “It’s all about understanding what consumers want and building disruptive products that give you a competitive advantage,” De Rossos said.
The ups and downs of the future economy
Despite Signet’s recent success, macroeconomics has been reminding De Rossos and his team how fragile what they have achieved is. In the most recent quarter, Signet’s year-over-year sales or business, excluding the impact of new or closed stores and business units, fell 7.6%. This result is basically inevitable, because after the new crown epidemic eased a year ago, sales performance has rebounded sharply. Regardless, Wall Street expects the company to see very limited sales growth over the next three years. Analysts expect its annual sales to hover around $8 billion by then.
To survive the weakening economic environment, the company will have to continue to follow De Rossos’ strategy of paying close attention to customer needs. In 2022, the company has further upgraded Jared’s grade and raised the price. At the same time, Kay will pay more attention to wedding jewelry and Zales will focus on fashion. Such a move would help protect its market share and profit margins, analysts said. Neil Saunders, managing director of GlobalData, said: “Signet has done a good job in adapting its product range, service and marketing to better cater to consumers.”
Drosos tried Signet’s wedding ring service in 2022, and she worked with James Allen’s staff to design her engagement ring ahead of her wedding in 2021. This ring features a 1930s Italian Art Deco design. “In the beginning, they didn’t find a set diamond they could be proud of, so they made me wait a while,” she recalls. The wait was worth it, she says: “I’m kind of an avant-garde guy myself. .” (Fortune Chinese website)
Translator: Feng Feng
Reviewer: Xia Lin
Most passersby at the mall don’t realize it, but America’s big, ubiquitous jewelry store chains are designed to serve different needs. Zales, for example, is more focused on fashion and trends and gifts for yourself—the kind of jewelry you might wear to the office, or to a casual party in your neighborhood. If you were looking for something more out of the ordinary, a gift for someone to celebrate a big life event like an anniversary or an engagement, you’d probably be more likely to go to Kay. And if you were going shopping with a substantially bigger budget and dip into quasi-luxury, willing to spend, say, $3,000 or more, you might leave the mall and go to a nearby Jared, which tracks higher-end.
Another thing most shoppers don’t realize is that all three of those chains—each a national brand with hundreds of stores—are owned by the same company: Signet Jewelers, a jewelry-retail behemoth headquarters in Ohio and incorporated in Bermuda. It’s a company celebrating a recovery, thanks in no small part to Gina Drosos, a longtime Signet board member and consumer-goods veteran who became CEO in 2017.
And for the record, the jewelry Drosos is wearing—on a Zoom call with a reporter—is Zales all the way. “I really enjoy the idea of jewelry as a fashion item, and how you stack and layer different pieces,” Drosos says , her voice revealing a slight Southern drawl. She runs her fingers across her set of three gold necklaces and explains that a Zales consultant gave her pointers on how to get the look she wanted—trendy, but still professional.
The Signet empire may not always be trendy, but it has considerably more momentum these days than it did when Drosos, the company’s first female CEO, took the helm. Not so long ago, it was not nearly as clear-cut what purpose each of Signet’s three biggest chains were most suitable for. Indeed, as Signet fell into a rut during the 2010s, its biggest banners cannibalized each other and started to become almost indistinguishable. business at Kay, a problem made all the worse given that the chains often operated rival stores within yards of each other at the same tired malls. “We had all of our banners pretty much on top of each other in the middle tier,” says Drosos.
A clearer delineation between Signet’s top three brands, which together generate 77% of company sales, was just one item on the CEO’s long to-do list. Despite being the single largest jeweler in the country, Signet was dealing with a litany of major problems when Drosos took over. Zales, which Signet had acquired in 2014, turned out to be booby-trapped—a debt-laden retailer with too many terrible stores, losing favor with both customers and suppliers. Signet’s balance sheet was being dragged down by its store credit-card business; and it had all but ignored e-commerce. Overlaid on all that was the fallout from massive sexual discrimination and sexual harassment cases that culminated with the departure of Drosos’s predecessor.
So far, Drosos’s plan to reinvent Signet—a strategy shaped by her decades of experience at Procter & Gamble, as well as by a stint as CEO of a genetic-testing startup—has registered some big successes. Signet has shed hundreds of weak stores in the Kay and Zales chains and reduced its reliance on discounting. It sold off that credit-card business. And it has finally adapted to the e-commerce era, thanks to deals such as its recent acquisitions of retail site Blue Nile and the rental service Rocksbox. Drosos has also begun to change Signet’s culture—by making sure shell-shocked employees, primarily women, feel heard and included and are willing to buy into management’s vision, and by dramatically overhauling the board.
Signet sales hit $7.8 billion in 2021—up 22% from Drosos’s first year in the corner office, and up 50% from their pandemic lows—to reach a new record. In mid-December 2022, Signet reported better than expected sales and profits results For its third quarter, bolstering Drosos’s claims of success.
At the same time, there has been no shortage of reminders of Signet’s challenges. Sales have been hit by inflation as customers have pared back on jewelry, a discretionary category if ever there was one. Kay, Zales, and even Jared shoppers are not Tiffany shoppers, let alone Cartier, after all—they’re not the kinds of people likely to spend big on jewelry when times get tight. The mid- and lower tiers of the US jewelry market are under enormous pressure, says Wendy Liebmann, CEO of WSL Strategic Retail: “We have come out of the pandemic and into inflation, where people are saying, ‘Do I really need it?’”
This holiday season could provide an early answer to that question: Signet typically gets 30% of annual sales in November and December. But whether jewelry shoppers show themselves to be skittish, bullish, or somewhere in between, there’s much work done, left to all the more given that Wall Street is expecting hardly any sales growth in the next two years for Signet.
Drosos’s game plan will have to be about winning more market share by outdoor its rivals; further diversifying its businesses; decade,” says Drosos. “We were much more about the merchandise, and working with vendors, than we were about listening to consumers.” The question is whether a new playbook and a new culture will keep Signet on an even keel in choppier waters .
The biggest jeweler, but with room to grow
Signet competes in a highly fragmented industry, where small regional chains and independent stores dominate. While it’s America’s biggest jeweler, it controls only 9.3% of a $76 billion market. It owes its size to 160 years of jewelry M&A.
The company’s portfolio dates back to the founding in 1862 of British jeweler H. Samuel. H. Samuel was absorbed in the 1980s by Ratner Jewelers, a conglomerate of UK and US regional chains, that around the same time also absorbed Sterling Jewelers. its name to Signet in 1993. Today, Kay, a former anchor of the Sterling empire, generates 38% of Signet sales, while Zales accounts for 22%, and Jared 17%. Signet also owns Banter by Piercing Pagoda, the mall kiosk fixture where countless Americans had their earlobes punctured for the first time. Signet gets about 6% of sales in Britain and Ireland, 3% in Canada, and the rest in the States.
Signet’s size made it dominant for decades—but like many industry leaders, it became sclerotic. The 2014 acquisition of Zale Corp., at the time Signet’s main rival, looks in hindsight like a classic example of a company buying the growth that it couldn’t t capture organically. The deal saddled Signet with more debt, along with a chain of stores that needed a big physical fix-up job, and had massive geographic and stylistic overlap with Kay. The strategic problem soon showed in the top line: Signet’s total sales peaked at $6.55 billion in the fiscal year ended in early 2016, then declined for the next five years, taking operating profitability down in the process.
That was the point at which Drosos stepped up. Drosos, a Signet director since 2012, had spent 25 years at P&G, rising to head of its beauty business. She had then detoured into biotech startup territory, becoming CEO at Assurex Health, a genetic testing company, and guiding it for four years until it got acquired. There, she says, she deepened her understanding of the power of data in decision-making—a knowledge that would prove pivotal in her new role.
Among the first obvious fixes on her plate was the need to cut stores in the Kay and Zales chains. Drosos ended up closing 1,250 stores across the company while opening 400 in better locations, with much of that change in the two biggest banners. All told , she closed 20% of Signet’s physical locations, which now number 2,500 stores in the US
Drosos also turned to deeper customer research to guide her reforms. One of the things consumers were telling Signet but that management hadn’t really heard was that they were ready to shop online. Jewelry shopping was one of the last ramparts in retail to resist e. -commerce, and it was an opportunity Signet had previously seemed to yawn at. (Tiffany was also late to e-commerce; LVMH, which bought Tiffany two years ago, has made turning the luxury jewelry into an e-commerce powerhouse a top priority .)
The new CEO realized that e-commerce wasn’t just about having a site that facilitates transactions, but about enabling people to conduct research before setting foot in stores. In one of her first moves as CEO, Drosos in 2017 bought JamesAllen.com— not because the site was a big business, but because it had tech that would upend the diamond industry. Its technology generates a 360-degree, high-definition image of every stone sold on the site, creating a virtual showroom in which buyers can choose from tens of thousands of diamonds. And that tech can now be used by the websites of Jared and Kay, too. “People can now see a diamond on our website better than they can see it in person, because we can blow it up and show it to them in HD,” boasts Drosos.
Tech has also been helpful in nerdy ways, specifically inventory management. If a ring is sitting unsold in a store in Fort Lauderdale, a salesperson in Minneapolis can access it for a customer. All this has meant a faster turnover of goods, meaning more fresh inventory in stores, and “newness” to draw in customers and protect profit margins.
Making e-commerce a priority turned out to be fortuitous, given the massive threat that would come from the COVID-19 pandemic. By mid-2020, Signet was dealing with the fallout of having stores closed for weeks on end in the spring—after all, Zales, Kay, and Jared were anything but essential retailers. Desperate to make sure revenue didn’t crater, the company sped the adoption of options like virtual selling and curbside pickup to accommodate shoppers wary of being in close quarters with others. Overall sales fell 15% in 2020, but the experience gave Signet some valuable new muscles. In 2017, some 5% of Signet’s sales were online; that rate now stands at 23%.
The James Allen deal also reflected a shift in Signet’s M&A strategy. The company had long been focused on buying out brick-and-mortar rivals; now, it’s more focused on deals that build up its e-commerce firepower, or at least win new customers. Central to this effort is Joan Hilson, a Victoria’s Secret alum who worked for Signet in the 1980s and whom Drosos hired in 2018 to be her strategy and finance chief.
One of Drosos and Hilson’s big goals was to fix Signet’s balance sheet, which was highly leveraged, and to bolster profitability by taking costs out of Signet’s operating structure. Since 2017, Signet has lowered its long-term debt by 80% to; $147 million and its operating profit margin was 11.6% in 2021, more than twice what it was just three years earlier. That stronger cash flow frees Signet to make bets through acquisitions. “It has generated liquidity for us to go out and grow our company,” says Hilson.
Take Blue Nile, which Drosos had been eyeing for years. Blue Nile created a sensation a decade ago as the first big online-only jewelry retailer. But the brand never truly took off, plateauing at $500 million a year in revenue. Signet bought it in September 2022 for $360 million, all cash, grabbing an e-commerce site with impressive virtual showrooms and an appealing young customer base. Other buys in 2022 include Rocksbox, a rental company; a small, specialized store chain called Diamonds Direct; and that help Signet offer services like maintenance and valuations.
The buying spree has made the Signet conglomerate even more sprawling: The company now has 11 retail banners under its umbrella, up from eight in 2017. That raises a new the question of whether Signet can keep the brands growing without confusing shoppers and competing itself. “That’s an extraordinary accumulation of brands,” says Liebmann, the retail analyst. “There’s a lot of potential for fragmentation and cannibalizing your own business if you’re not careful.” But for now, the three big chains—Kay, Jared, and Zales—are growing simultaneously again, not least because Drosos’s team had the discipline to close the stores that needed to be closed.
Tackling a toxic culture
Drosos would not have been able to effect this turnaround without changing Signet’s culture. Like many retailers, Signet had long been a company with a mostly female workforce, a mostly female clientele, and mostly male leadership. By the time Drosos became CEO, that lineup had created an untenable situation.
The breaking point came after a devastating Washington Post story in February of 2017 that alleged years of systemic, rampant sexual harassment by male supervisors all the way up the chain of command. The story specifically implied Mark Light, a Signet lifer who became CEO in 2014 Among other allegations, Light reportedly was seen in a pool with “nude and partially undressed female employees” at a corporate retreat. Light and Signet repeatedly denied the allegations. But Light left in the summer of 2017, citing unspecified health issues, and other Implicated managers also departed. And in 2022, Signet settled a class action suit alleging gender bias in its hiring and compensation practices, shelling out $175 million to 68,000 current and former employees.
The toxic culture went beyond rampant misbehavior: It also took the form of a quasi-autocratic approach to business in which the bosses, disproportionately men, didn’t listen to what people in the field, the predominantly female frontline Signet workers, were seeing. Drosos, says that as a board member from 2012, she had always pushed for Signet to diversify its workforce and culture. When she became CEO, she says, the board told her to accelerate that effort.
Fixing a culture of fear and risk aversion is a tall order. “It was one of the things that made me the most nervous about taking this job,” Drosos says. Among her first moves: Making diversity and inclusion goals part of every leaders’ evaluation and creating a zero-tolerance policy for sexual harassment. “I’m going to create a clean slate. I’m not going to let history be our future,” she recalls thinking. Today, 42% of Signet employees at the vice -president level or higher are women; at the store level, 76% of assistant managers or higher are female. “Representation at that level sets a vision for all employees of what’s possible,” she said.
Another key fix: giving more autonomy and authority to store-level management. When she started as CEO, Drosos made the rounds of stores, sitting in on team meetings and even listening in on customer service calls to get a sense of what truly needed fixing “What I realized very quickly was that it was quite a top-down culture of command and control,” she says. “We had brilliance in the organization that we just needed to unleash.” Store managers have a lot more say now in what Signet’s chains will carry. That move, combined with the closures of overlapping stores, has helped make individual stores far more productive: The average Signet store now generates 50% more in annual sales than it did pre-pandemic.
That coup reflects Drosos’s own history: She says she benefited from support from responsive higher-ups in her 25 years at Procter & Gamble. She counts among her mentors AG Lafley, the iconic CEO credited with leading a turnaround at the consumer giant in the early 2000s. It was at P&G that Drosos understood the importance of responding quickly to information from the front lines. She put those insights into action, and made her reputation, with her turnaround of famous skin-care brand Olay.
Armed with the in-depth market data for which P&G is famous, Drosos saw a big white space in the skin-care market between fancy, pricey department store brands, and low-price drugstore brands. Olay wasn’t selling a single product over $10 at Walmart or CVS. “There was a big gap,” she recalls. So she created a $25 moisturizer that she argued was on par with Crème de la Mer, a luxury beauty product sold at Neiman Marcus for hundreds of dollars a jar. The gambit took off: A brand that had seen $250 million in annual sales when she took it over had reached $2.5 billion a year by the time she was done with it. “It was really all about consumer understanding, and creating disruptions that would form a competitive advantage for us,” says Drosos.
A choppy economy ahead
For all of Signet’s recent success, the economy keeps reminding Drosos and her team how fragile that progress can be. In its most recent quarter, Signet’s comparable sales, or business excluding newly added or removed stores and business units, fell by 7.6%. Of that drop was just the law of arithmetic after the dramatic sales bounce-back a year ago as the pandemic eased. Nonetheless, Wall Street is expecting very limited sales growth over the next three years, with analysts predicting that annual sales will hover at about $8 billion during that time.
To power through a softening economy, the company will have to keep following Drosos’s playbook of listening closely to what customers want. It has recently taken Jared further upscale with higher price points, and focused Kay more tightly on bridal jewelry and Zales on fashion, and Analysts say moves like that could help protect its market share and margins. “Signet deserves credit for pivoting its assortment, services, and marketing to better cater to consumers,” says Neil Saunders, managing director of GlobalData.
Drosos recently got to try out Signet’s bridal-ring services, working with staff at James Allen to design her own engagement ring ahead of her marriage in 2021. The ring had an Italian Art Deco design from the 1930s. “They couldn’t find a diamond that they were proud enough of to put in the ring at first, and so they made me wait,” she recalls. The wait was well worth it, she says: “I’m a bit more of a bold statement maker myself. “
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