Signet Jewelers to Buy Blue Nile for $360M

Signet Jewelers, the retail and parent company of Zales, Kay Jewelers and Rocksbox (to name a few), has signed a definitive agreement to acquire Blue Nile, an online retailer of engagement rings and fine jewelry, for $360 million in an all cash transaction. Blue Nile delivered revenue of more than $500 million in calendar year 2021.

The deal is part of Signet’s larger efforts to accelerates its expansion of bridal offerings and grow its "Accessible Luxury" portfolio, while also solidifying its position as a leader in the digital jewelry space, according to a news release. Blue Nile has a customer demographic that is “younger, more affluent and ethnically diverse,” which Signet hopes will broaden its customer acquisition funnel.

Upon closing, Blue Nile will be strategically positioned at the top tier of Signet's Accessible Luxury banners along with Jared, James Allen and Diamonds Direct.

"Blue Nile is a pioneer and innovator in online engagement rings and fine jewelry, providing a unique and highly desirable shopping experience for customers," said Signet CEO Virginia C. Drosos in the release. "Adding Blue Nile to our strong and diversified portfolio of banners will further drive our Inspiring Brilliance growth strategy — expanding customer choice, building new capabilities, and achieving meaningful operating synergies that will increase value for both our consumers and shareholders."

The transaction will be funded with cash on hand and is currently expected to close in the third quarter of fiscal 2023. Regulatory filings were made in July and the applicable waiting period has passed. While synergies are likely to start materializing as early as the fourth quarter of fiscal 2023, the acquisition will likely not be accretive until Q4 of fiscal 2024, per the release.

Separately, Signet is updating its guidance for the second quarter and full year of fiscal 2023 given heightened pressure on consumers' discretionary spending and increased macroeconomic headwinds.

"We saw sales soften in July as our customers have been increasingly impacted by rapid inflation, so we're revising guidance to align with these trends,” Drosos said in the release. “That said, I'm pleased that revised guidance positions us up 25% in revenue versus the FY20 pre-pandemic period. In addition, our transformed operating model and strong balance sheet give us dry powder, even in a down market, to invest in market share expansion as we are doing organically in our banners and with the acquisition of Blue Nile."

Signet operates roughly 2,800 stores primarily under the name brands of Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, JamesAllen.com, Rocksbox, Peoples Jewellers, H. Samuel and Ernest Jones, according to its website.