Zales owner Signet buys online jewelry brand Blue Nile

A pedestrian walks past a Zales store in New York.

Scott Eells | Bloomberg | Getty Images

Signet Jewelers announced on Tuesday that it will acquire online jewelry retailer Blue Nile for $360 million in an all-cash deal, in a bid to attract younger consumers and grow its bridal business. .

Separately, Signet cut its financial guidance for the second quarter and fiscal year 2023, given “increased pressure on consumer discretionary spending” and other macroeconomic headwinds.

Chief executive Virginia Drosos said the company began to see weaker sales in July as shoppers began to control spending amid 40-year high inflation.

The parent company of Zales, Jared and Kay Jewelers said it expects second-quarter revenue of about $1.75 billion and non-GAAP operating profit of about $192 million.

The company now expects fiscal 2023 sales to be between $7.60 billion and $7.70 billion, down from a previous range of $8.03 billion to 8. .25 billion dollars.

It pegs annual non-GAAP operating profit in the range of $787 million to $828 million, down from earlier guidance of between $921 million and $974 million.

Signet said the revised numbers do not take into account the further significant worsening of macroeconomic factors that could hurt consumer spending, or its pending acquisition of Blue Nile.

Signet said the deal, which will be funded with available cash, is expected to close in the third quarter. However, the deal is unlikely to be accretive for the company until the fourth quarter of fiscal 2024.

Even in a bear market, Drosos said, the company’s strong balance sheet and “dry powder” enabled it to fund an acquisition of Blue Nile to increase its market share.

Earlier this year, Blue Nile and special purpose acquisition firm Mudrick Capital Acquisition Corp. announced that they had agreed to partner in a deal that would allow the jewelry brand to go public through SPAC. The merger had valued the combined company at the time at $873 million.

Blue Nile and Mudrick did not immediately respond to CNBC’s request for comment on why the deal fell through.

Signet shares rose about 2% in premarket trading. The stock is down about 22% year-to-date, as of Monday’s market close.

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