Peoples Jewellers owner bought for US$1.4B in deal that could bring Kay Jewellers to Canada
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Peoples Jewellers owner bought for US$1.4B in deal that could bring Kay Jewellers to Canada Two of the U.S.' biggest diamond sellers — including the owner of Canada’s Peoples Jewellers and Mappins — have agreed to a multi-million dollar marriage of convenience
Article content Two of the U.S.’ biggest diamond sellers — including the owner of Canada’s Peoples Jewellers and Mappins — have agreed to a multi-million dollar marriage of convenience.
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Article content Signet Jewelers Ltd.’s acquisition of Zale Corporation, a deal valued at US$1.4-billion including debt, is the latest sign of industry consolidation as chains and mom-and-pop shops increasingly battle online upstarts for customers. We apologize, but this video has failed to load.
tap here to see other videos from our team. Try refreshing your browser, or Peoples Jewellers owner bought for US$1.4B in deal that could bring Kay Jewellers to Canada Back to video The top two U.S. mid-priced jewellers announced Wednesday they have entered into an agreement in which Signet will acquire all of its smaller rival’s issued and outstanding stock at US$21 in cash per share, a 41% premium over the closing price on the New York Stock Exchange a day earlier. With this acquisition Signet, the largest specialty retailer in the U.S. and the U.K., boosts its store locations from 1,900 to 3,600 and becomes the leading trinket retailer in Canada, said Mike Barnes, the chief executive and director of Signet Jewelers.
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Article content “We are not only number one in the U.S. and the U.K.; this acquisition will also make our newly combined company number one in Canada as well and it will allow us to continue building a platform for potential future geographic expansion,” he said during a conference call Wednesday. Investors seemed to like the pairing as Zale stock rose more than 40% to close at $20.92 on the New York Stock Exchange — impressive given that it hovered as low as $3.80 last March. Signet’s stock rose 18% Wednesday. The combined company will generate approximately US$6-billion in sales and more than $700-million in EBITDA, and will have nearly 30,000 associates, Mr. Barnes said. With Signet’s jewellery brands Kay and Jared, which are leaders in the mid-priced and the upper-mid-priced segments, the addition of Zale’s equally mall-friendly brands “will help us maximize our midmarket success,” he said.
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Article content The new company is also expected to see $100-million in synergies by the third year of operation, in large part due to stronger buying power and cost improvements, Signet executives said on the conference call. The Zale brand will operate as a separate standalone division within Signet, led by Zale’s chief executive Theo Killion. This acquisition, subject to shareholder approval, would cap what has been a tumultuous run over the years for Zale, and Peoples Jewellery. Peoples was founded in Toronto 1919 by the Gerstein family, which grew the business over the following decades into a chain of jewellery stores with as many as 280 locations by the 1980s. In 1986, Peoples teamed up with Switzerland’s Swarovski International to swing the junk-bond financed US$650-million purchase of Zale, which at the time was a firm more than five times its size. In 1989, the company later bought Gordon Jewelry Corp for US$311-million.
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Article content But after recession hit in the early 1990s, combined with high interest payments, Zale was pushed to the brink, filing for bankruptcy in 1992. In 1993, Peoples followed it down. In an odd twist, by 1999, a stronger, financially-healthier Zale bought Peoples Jewellery for US$115-million. Many years later, consolidation in the jewellery industry at all price points continues, said David Wu, luxury goods analyst at Telsey Advisory Group in New York. Hamilton, Bermuda-based Signet had previously discussed buying Zale but those talks ended in 2006 after Zale’s board decided to stay independent, according to Bloomberg. After Zale saw slumping sales in recent years, it embarked on a multi-year restructuring which is “starting to bear fruit”, said Mr. Wu, drawing a suitor.
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Article content Zale Corp.’s holiday sales results showed overall comparable store sales up 2%, with Zales’ branded stores up 4.4% and Peoples performing strongly at 2%. Mappins, however, saw sales drop more than 6%. In both Canada and the U.S., this sector of retail remains fragmented with independent retailers and mom-and-pop stores competing with the jewellery giants, but consolidation is increasing as chains look to benefit from economies of scale. “Consolidation has been happening, but at a very slow pace,” Mr. Wu. said. “This acquisition does speed up the pace.” The U.S. jewellery industry is also consolidating as stores face online challengers such as Blue Nile Inc., Ken Gassman, president of the Jewelry Industry Research Institute, told Bloomberg. Mr. Wu said the deal potentially allows to roll out its brands north of the border and providing Zale with access to “best in class” management. “It really gives Signet an entry way into the Canadian market,” he said. “I wouldn’t be surprised if Signet uses some of the real estate it currently has in Canada and potentially convert some of the underperforming Mappins stores into potentially a Kay store or a Jared store…. which I think would be very well-received.” With files from Bloomberg
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‘Somebody’s got it’: Customers out hundreds of dollars after jewelry shop closes
EDMONTON – At least eight customers of an Edmonton jewelry store and repair shop are without their jewelry — some worth thousands of dollars — after the store closed.
Linda Rodd-Kitchen dropped off her $2,500 ring at Heart to Heart Jewellery on 118 Avenue in late October for repairs. She had been doing business with David Dorash, who had made her precious ring, for two decades.
“It was little pieces of gold from my grandmother’s ring, my mother’s ring, that was melted down,” Rodd-Kitchen said.
Dorash had been in and out of hospital recently. When Rodd-Kitchen called to arrange to pick her ring up at his shop, an unfamiliar woman answered.
“And said Dave had passed away. And they were going to have to break into the safe,” Rodd-Kitchen said.
She called again the next day.
“And I said I was wondering whether I could come and pick up my ring and he goes, ‘Well do you have a slip?’ And I go, ‘No we never had a slip with Dave.'” Instead, customers said Dorash would place the jewelry in a small brown envelope and write customer’s name and number on it.
“We never questioned it,” Rodd Kitchen said. “I had never had a problem. Ever.”
Hours later, Rodd-Kitchen discovered the shop was empty with a note directing customers to contact the jeweller’s family.
Edmonton Police Service spokesperson Cheryl Voordenhout said 15 people reported missing jewelry. EPS investigated but no charges were laid.
“I believe police returned jewellery [sic] to three complainants and family also made effort to return jewellery to complainants as well,” Voordenhout said. “Unfortunately the record keeping on the part of the store wasn’t there. So it’s very difficult for investigators to know what was in the store at any given time.”
CTV News Edmonton has spoken with seven additional customers who say they haven’t been able to recover their jewelry either. Christina Miketic-Ketsa said she is now without a $500-necklace and her wedding ring, appraised at $8,500, but managed to recover $4,000 through insurance.
CTV News also reached out to Dorash’s brother, Ernie, who said via text, “Not one piece was taken by any family member.
“When the safe was opened it was empty,” Dorash added.
Customers are still puzzled to what happened. Police said a break-in and robbery was reported at Heart to Heart Jewellery on Aug. 7 for a robbery on July 30. No arrests were made and some jewellery was reportedly stolen. CTV News has also learned Dorash was diagnosed with dementia.
“It’s out there somewhere,” Rodd-Kitchen said. “Somebody’s got it.”
Rodd-Kitchen is now considering legal action against Dorash’s estate.
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