Zales parent Signet Jewelers has agreed to buy online engagement ring and fine jewelry retailer Blue Nile for $360 million in cash, as the world's largest diamond jewelry retailer looks to expand its bridal offerings and attract younger consumers.
The transaction will be funded with cash on hand and is expected to close in the third quarter of fiscal year 2023. As of April 30, Signet had $927.6 million in cash and cash equivalents. The deal will likely not be accretive until the fourth quarter of fiscal 2023, according to the company.
The applicable waiting period has passed and the regulatory filings were made in July. The transaction is still subject to other customary closing conditions.
Blue Nile will be positioned at the top tier of Signet's Accessible Luxury banners alongside Jared, James Allen and Diamonds Direct.
Blue Nile is a pioneer in online engagement rings and fine jewelry, providing a unique shopping experience for customers, according to Signet CEO Virginia Drosos. Adding Blue Nile to our strong and diversified portfolio of banners will drive our Inspiring Brilliance growth strategy — expanding customer choice, building new capabilities, and achieving meaningful operating synergies that will increase value for both consumers and shareholders. Blue Nile's revenue was more than $500 million in the year 2021.
The move came after Signet revised its guidance for the second quarter and full year 2023 after seeing sales soften in July due to soaring inflation.
In July, Signet Chief Financial and Strategy Officer Joan Hilson said in a statement that while our initial guidance for FY 23 predicted the impact of 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 higher price points. We are modestly reducing our FY 23 guidance due to the assumption that this trend will continue in the back half of the year. The preliminary second quarter revenue is estimated to be around $1.75 billion and non- GAAP operating income of approximately $192 million. The Wall Street estimate is $1.78 billion, according to Refinitiv data.
Total revenue for fiscal 2023 is expected to fall within the range of $8.03 billion and $8.25 billion and non- GAAP operating income between $921 million and $974 million.
The guidance does not include the pending acquisition of Blue Nile or a worsening of macroeconomic factors that could affect consumer spending.
Shares of Signet have fallen more than 27% year to date.