Signet Jewelers Ltd (SIG.N) SIG.L, owner of the Kay Jewelers chain, said on Wednesday it has bought Ultra Stores Inc in a move aimed at giving it a bigger foothold in the growing jewelry outlet sector.
Signet paid Crystal Financial LLC $57 million in cash for Ultra Stores, a 21-year-old chain that primarily operates stores in outlet centers.
Signet Chief Executive Michael Barnes said in a statement that the deal "will immediately result in our having a significant share of the outlet channel for jewelry."
Kay's closest rival, Zale Corp's ZLC.N Zales chain, operates 132 outlet stores, which generate 10 percent of company revenue. The Zales outlets, which offer discounted merchandise in a simpler store setting, generated $469 per transaction last fiscal year, compared with $426 at its regular stores, according to a regulatory filing.
Lazard Capital Markets analyst Jennifer Davis said in a note that the deal could boost Signet's annual sales by 3 percent given that Kay only has 26 outlet stores. Ultra, which has about 100 stores, would help Signet close the gap with Zales, Davis said.
(Reporting by Phil Wahba in New York; Editing by Gerald E. McCormick)