Signet Jewelers says it has agreed to pay about $175 million to settle a class-action lawsuit that alleged gender pay and promotion discrimination involving tens of thousands of current and former employees.
The proposed settlement, involving Signet’s Sterling Jewelers subsidiary, was included in regulatory filings for the Akron jewelry retailer’s first quarter financial results that were released Thursday. The agreement was reached on Wednesday, the company said.
The lawsuit alleged Signet-owned brand stores discriminated against female employees in pay and promotions dating back to 2003.
Signet issues statement
The company and plaintiffs put out a joint statement on the settlement separate from Signet’s earnings release. A spokesperson said the company will not comment beyond what was in the statement.
About $125 million of the settlement will go to about 68,000 claimants, the company said. That works out to an average of $1,838 per person. The remaining $50 million will pay for estimated employer payroll taxes, administration fees, and attorney fees and costs, according to the regulatory filing.
“For the past four years, we’ve been successfully transforming Signet’s business model and culture. I want to thank our dedicated team members for helping to create our welcoming and inclusive environment where everyone is invited to be their authentic self. We believe prioritizing diversity, equity and inclusion grows high-functioning teams and fosters a culture of appreciation and development,” Gina Drosos, Signet chief executive officer, said in the statement. “This settlement is an important step in bringing closure to a nearly 15-year-old case. We look forward to continuing our focus on diversity as an important business strategy for Signet, and propelling the innovation, growth, and opportunity that allows our team and company to shine.”
The lead counsel for the plaintiffs said the settlement provides for “significant monetary relief.”
“On behalf of our legal team, we applaud the courage of our clients in the pursuit of this case of singular importance to protecting the rights of women in the workplace. This settlement provides for significant monetary relief for our clients and ensures that the practices that gave rise to this case will not recur. And we applaud Sterling Jewelers for undertaking important and meaningful changes to its workplace policies, which have moved it forward as a leader in gender equality,” Joseph Sellers, lead counsel from the law firm of Cohen Milstein Sellers & Toll PLLC, said in the statement .
The company said it has discontinued pay and promotions practices that were part of the lawsuit. In addition, Signet said in recent years it has made diversity, equity and inclusion an integral part of its business strategy and has new development programs in place for employees interested in being promoted to managers.
Strong quarterback despite loss
Signet reported a strong first quarter for fiscal 2023 even as its net income showed a loss because of a one-time charge of $190 million related to the proposed legal settlement.
The agreement would end legal proceedings that began in March 2008. The deal still needs approval from an arbitrator, the company said in its quarterly filing with the Securities and Exchange Commission. The company said it expects to fund the settlement in its fiscal 2023 third quarter if the agreement is approved.
Signet reports it lost $83.5 million, or $1.89 per share, on revenue of $1.84 billion for the first quarter ending April 30. That compares to a profit of $138.4 million, or $2.49 per share, on revenue of $1.69 billion a year ago.
Adjusted earnings that do not include the one-time $190 million charge showed a profit of $2.86 per share for the first quarter of 2023, up from $2.23 a share a year ago, the company said.
Lawsuit was in arbitration
The lawsuit went to arbitration, with Signet denying all of the allegations. Besides paying out $175 million, the proposed settlement provides for the dismissal of the arbitration with prejudice, the company said in its SEC filing.
Signet has come under legal fire in recent years.
The New York Times in 2019 published a magazine article that detailed sexual harassment and discrimination cases filed by female employees at Signet and Sterling Jewelers Inc. The Washington Post in 2017 wrote about allegations of misconduct at the company. Besides disputing the allegations in the lawsuits, Signet has said related media coverage has been unfair and needed correcting.
Company brands include Kay Jewelers, Jared, Piercing Pagoda, Diamonds Direct, JamesAllen.com and others.
Company shares rise
On Thursday, Signet stock closed up $5.58 or 9% at $67.83.
Over the past 52 weeks, shares have ranged from a low of $48.31 to a high of $111.92.
The company reaffirmed its earnings guidance for the full year and said it was increasing a share buyback authorization plan by $500 million.
“Signet’s strong performance this quarter reflects our team’s successful execution and agility amidst retail headwinds,” Drosos said in the earnings release. “We generated nearly 9% topline growth, including 2.6% organic sales growth, enabled by our healthy inventory position, connected commerce capabilities and data-driven marketing.”
“We are reaffirming our annual guidance and expanding our share repurchase authorization by $500 million,” Joan Hilson, chief financial and strategy officer, said in the release. “While we anticipated and experienced softening within lower price points resulting from heightened inflation and the lack of stimulus, we delivered offsets through tailored assortments, digital capabilities and enhanced services to maintain higher average transaction values.”
Signet said it expects to show a full-year profit of $12.72 to $13.47 per share, with revenue ranging between $8.03 billion and $8.25 billion. As of April 30, the company had 2,854 stores across its brands, about the same as a year ago.
Beacon Journal reporter Jim Mackinnon can be reached at 330-996-3544 or [email protected]. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ.
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