Talk about failing to quell a storm.
Signet Jewelers (SIG) shares remained down 12% on Tuesday even after the struggling jeweler issued a statement saying that a devastating Washington Post story alleging years of systemic, mass sexual harassment “create a distorted, negative image of the company.”
The company, which owns leading jewelers Kay, Jared and Zales in the United States as well as Peoples in Canada and two British chains, saw shares fall to $64.35 in mid afternoon trading.
Signet’s shares have already been dinged in the last year by allegations of gem swapping at its Kay Jewelers stores in May 2016, charges it denied, and by declining sales. Comparable sales fell 4.6% during the crucial holiday season, a decline Signet partly blamed on a faulty website but that analysts said was caused by how much of its jewelry is bought on credit. What’s more, Signet’s ill-fated 2014 acquisition of Zale Corp has proved difficult for the once-high flying company to digest.
The Post’s story alleged among other things that Signet managers sent “scouting parties” to find attractive female employees, that its mandatory annual meeting was a “boozy, no-spouses-allowed ‘sex-fest’” and that Signet CEO Mark Light was alleged to have been seen in a pool with “nude and partially undressed female employees.” The arbitration case that was the basis of the story was initially filed in 2008 by more than a dozen women.
Signet in its release said the arbitration claim had only alleged gender discrimination in pay and promotion. “None of the 69,000 class members have brought legal claims in this arbitration for sexual harassment or sexual impropriety. Since its filing, it has never included legal claims of sexual harassment or hostile work environment discrimination,” Signet said. The company added that it had investigation the discrimination allegations and found no basis for them.
Light became head of Sterling, Signet’s main U.S. business, in 2006 and oversaw a tripling of the unit’s sales. According to Signet’s proxy filing last year, Light had a $7.4 million compensation package.
The whole saga has been a dramatic turn of events for Signet. Coming out of the recession, its strong financial position and management meant vendors favored it over struggling rivals like Zales, creating a virtuous cycle that saw the company turn into a behemoth in an industry still fragmented and dominated by mom-and-pop shops. Signet has a roughly 15% share of the U.S. market and is about three times the size of Tiffany & Co (TIF), a much higher end rival.