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Layoffs in the oil industry are setting jewelry stores and many fast food restaurant chains back on their bottom lines, according to a new report by Business Insider.
Signet Jewelers reported on Thursday that a decline in sales in energy-dependent areas in the United States accounted for nearly half of its sales losses in the second quarter of 2016.
Kay Jewelers and Jared - both part of Signet’s portfolio - saw sales figures drop by 2.3 percent in stores open for over a year.
The company had anticipated 1-2 percent growth in sales, while analysts had predicted one percent growth, Bloomberg reported. The new numbers indicate Signet missed both forecasts.
Signet’s shares fell by 13 percent on Thursday in response to the release of the quarterly report.
"Our stores and states and provinces closely tied to the energy industry dramatically underperformed the division averages,” CEO Mark Light said during Signet’s earnings call. "It didn't matter the store banner, the price point, or the merchandise brand. It was an obvious across-the-board trend.”
Fast food outlets, such as Popeyes’ fried chicken and Del Frisco’s steaks also reported lower revenues, citing massive layoffs in the energy industry as a reason that former customers had turned to penny pinching.
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Pressures from chronically low oil prices have led to layoffs in almost all sectors of the oil and gas industry in recent months.
Oilfield services group Baker Hughes said last month that it had cut 3,000 jobs in the second quarter in a bid to increase annualized savings as its loss widened to US$911 million, from US$188 million for the second quarter last year.
The situation is particularly dire in Texas, where around 99,000 direct and indirect jobs in the Lone Star state have been eliminated since prices collapsed two years ago – equivalent to about one third of the entire industry. In April alone there were about 6,300 people in oil and gas and supporting services that were handed pink slips. Employment in Texas’ oil sector is close to levels not seen since the aftermath of the financial crisis in 2009.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com