Signet Jewelers Ltd. reported a 54.4% increase in online sales for its third quarter ending Nov. 3. Signet, which owns brands including Zales, Kay and Piercing Pagoda, said 10.5% of total third-quarter sales, or approximately $125.1 million, came from e-commerce, compared with 7% or $81.0 million during the same period last year.
However, sales at its largest digital property, JamesAllen.com, had slower growth than previous years, CEO Gina Drosos said on an earnings call transcribed by Seeking Alpha. The online-only brand grew sales 13.6% year over year to $52.5 million for Q3.
“In the third quarter, we started collecting sales tax in an additional 24 states such that by the end of the third quarter, sales tax was being collected in states representing about 50% of our revenues,” Drosos said. “[James Allen’s growth is] a sequential slowdown which we expect to continue over the next few quarters as we work through the implementation of sales tax in additional states.”
Signet is one of many retailers adding sales tax to the online checkout process in the wake of the the Supreme Court ruling in South Dakota v. Wayfair, which allows states to collect sales tax from online retailers that don’t have a physical presence in the state. Because sales tax is often based on an order’s value, higher priced items like jewelry have higher sales tax totals.
“We are testing a variety of customer initiatives, and remain positive about the long-term growth prospects for James Allen, as well as continuing to leverage their digital capabilities across our banner websites,” a Signet spokesman said in a statement to Internet Retailer.
Drosos also said Signet, No. 102 in the Internet Retailer 2018 Top 1000, is tracking how its competitors who already collected sales tax are doing in the same markets to measure any significant problems, but she feels that the brand won’t be affected by the slowdown in the long term.
In other earnings news:
- Workout apparel retailer Lululemon Athletica Inc. (No. 90) is testing a membership program that offers free expedited shipping, among other perks. The trial in Edmonton, Alberta, Canada, costs $128 per year and includes workout classes, exclusive clothing and member-only events, CEO Calvin McDonald said on an earnings call transcribed by Seeking Alpha. The trial will continue during the first half of next year, with changes in pricing and offerings in different cities. For the third quarter ending Oct. 28, the retailer reported a 44.2% increase in online sales, which represents 25.3% of revenue or $189.2 million.
- Outdoor apparel brand Lands’ End (No. 51) announced double-digit growth in U.S. e-commerce sales, but didn’t break out exact figures for the third quarter ending Nov. 2. Direct sales, which include online sales and those made through the retailer’s catalog, were up 8%. It also announced that investments in its website, including improved internal search, optimization for search engines and clearer pricing have increased conversions by double digits.
- Ulta Beauty (No. 91) reported a 42.5% increase in online sales for the cosmetics retailer’s third quarter ending Oct. 28. Online sales increased to $170.7 million from $119.8 million during the same period last year. It also announced a full year forecast in the 40% growth range for e-commerce. A new distribution center in Fresno, California, now completes 21% of e-commerce orders, Ulta announced.
- Digital sales at Hudson’s Bay Co. (No. 36) increased 8.0% across its department stores for the third quarter ending Nov. 3. Retail websites for all its brands, including TheBay.com, SaksFifthAvenue.com and LordandTaylor.com are now all on the same platform, said CEO Helena Foulkes, which will allow the retailer to better keep up with changes in the digital sales environment. When they wanted to make website changes or alter its e-commerce operations slightly, “it quite frankly took too long, so we’ve got a team together that’s 100% focused on all things digital,” she said in an earnings call transcribed by Seeking Alpha.