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Signet CEO Hit By Sexual Harassment Controversy Leaving Company

A former P&G boss is taking his place.

The Signet Jewelers (sig) CEO who faced allegations of misconduct during the retailer's ongoing sexual harassment controversy is leaving the company, citing health reasons.

Mark Light, who became chief executive of the largest U.S. jewelry retailer in late 2014, will be replaced by a longtime Procter & Gamble (pg) executive and current Signet director Virginia Drosos on August 1, the company said on Monday. She'll face the daunting task of getting the company, which operates the Kay, Jared, and Zales stores in the United States, along with British chains, back on track saleswise and past a series of damaging hits to its reputation in the last year.

Those have included allegations of gem swapping at its Kay Jewelers stores and a devastating Washington Post story earlier this year alleging years of systemic, mass sexual harassment, charges Signet has repeatedly and adamantly denied. The Post story said among other things that Light was alleged to have been seen in a pool with "nude and partially undressed female employees."

These problems, coupled with weak sales including a dismal holiday season, spooked investors of what until recently had been a highly successful company: Signet shares, which barely budged on the CEO change news, were trading at around $60 on Monday, a far cry from the $150 levels of October 2015, when they hit an all time high. Signet has been one of the worse S&P 500 performers this year.

The problems of the last two years mark a dramatic turn of fortunes 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.

Virginia Drosos (C)Erenest-McCreight

Just over a year ago, some customers complained that Kay stores (which generate 40% of company sales) had swapped out the diamonds on jewelry they brought in for repair or cleaning. Signet denied the accusations, but also said it would start testing a tracking system. Last month, Signet settled a complaint by the U.S. Equal Employment Opportunity Commission over the pay and treatment of female employees (there was no finding of wrongdoing and no penalties imposed on it by the EEOC) but there is still a separate arbitration case, which involved only gender discrimination and not harassment, that is expected to go to trial next year.

Signet has set up a special board committee on "respect in the workplace," and tapped a former federal judge to oversee a "thorough review of the company's policies and practices regarding equal opportunity and workplace expectations."

Beyond all these issues, Signet is trying to compete in a difficult U.S. market for jewelry- Tiffany has found sales sluggish in its more modestly priced silver jewelry in the United States.

Earlier in her career, Drosos, a Signet director since 2012, has been Assurex Health and group president of P&G's global beauty care division.

Signet Chairman Todd Stitzer, said in a statement that Drosos "is deeply familiar with Signet’s strategic vision and has been pivotal in our efforts to realign our organizational structure." As for Light, his departure marks the end of long career at the company. Light became head of Sterling, Signet’s main U.S. business, in 2006 and oversaw a tripling of the unit’s sales. But more recently, business has been abysmal: same-store sales in the first quarter fell 11.5%.

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