New York–Signet Jewelers Ltd. has acquired R2Net, the owner of online retailer JamesAllen.com, for $328 million in cash, the retailer announced Thursday morning.
The acquisition allows Signet to add what new CEO Gina Drosos described as a “very strong, fast-growing e-commerce brand” to its portfolio and gives the retailer control of R2Net’s technology arm, Segoma Imaging Technologies, which Drosos said will enable it to “deliver a new-generation digital shopping strategy for jewelry.”
These technologies include a diamond imaging camera, which can create 360-degree HD images with a 40x super-zoom and can be used on any device; 3-D imaging technology that allows shoppers to pair loose diamonds with rings; a ring try-on app; and 24/7 customer service and chat capabilities.
Signet will be bringing the JamesAllen.com executive team on board, including co-founder and CEO Oded Edelman, who will become Signet’s chief digital innovation adviser, reporting directly to Drosos.
Drosos said for now, the plan is to operate JamesAllen.com as an independent division of Signet, while also applying R2Net’s technologies to their stores’ websites and using it in stores. Over time, the retailer will look at whether a showroom-type concept makes sense for JamesAllen.com.
Signet took out a short-term loan to pay for the acquisition, which it will repay with proceeds from the sale of its prime-only credit accounts under its credit outsourcing program.
The transaction is expected to close in the third quarter and is subject to customary closing conditions and regulatory approval.
The announcement came as Signet released its results for the second quarter ended July 29, the first call it has held since Mark Light stepped down and Drosos became CEO at the end of July.
Same-store sales were up 1 percent, driven by e-commerce platform improvements–online sales were up 18 percent in the quarter–Mother’s Day, which is typically split between Q1 and Q2 but fell squarely in Q2 this year, and a July bridal event.
This included a 7 percent increase in same-store sales at Piercing Pagoda and 3 percent at Kay Jewelers. Comps were essentially flat for both Jared the Galleria of Jewelry and Zales in the quarter.
Signet’s total sales were $1.40 billion, a 2 percent year-over-year increase.
Operating income was $135.6 million, or 9.7 percent of sales, compared with $119.9 million, or 8.7 percent of sales, in the prior-year period.
So far this year, Signet has closed 98 stores, mostly regional brands and underperforming mall stores, and opened 53, for a net loss of 45 stores.
On Thursday morning’s call, the company also provided an update on the outsourcing of its credit portfolio.
Signet said that part one of the plan, the sale of $1 billion of prime-only credit accounts, is on track for completion in October. The retailer also said that its lease-purchase program has been rolled out ahead of schedule.