Jeweler Signals Breakout On Earnings Crush, Hiked Outlook

Signet stock eyed a breakout as the leading global retailer of diamond jewelry hiked full-year guidance after crushing Wall Street’s earnings estimates for its fiscal second quarter, which ended in July.


Same-store sales at Signet Jewelers (SIG)  almost doubled in Q2 and also topped views.

Signet Earnings

In Q2, Signet earnings came in $3.57 per share, swinging from a loss of $1.13 per share a year ago. Revenue more than doubled, year over year, to $1.8 billion. Analysts were expecting EPS of $1.70 and revenue of $1.648 billion, according to FactSet.

Same-store sales vaulted 97.4%, with broad strength across Signet’s North America and international segments. That compares to the 79.2% gain that analysts were expecting, per FactSet.

Brick-and-mortar same-store sales grew 130%. E-commerce sales climbed 25% to $336.2 million.

“Our performance this quarter demonstrates that our banner value propositions, product newness, always-on marketing and connected commerce experiences are resonating with new and loyal customers,” CEO Virginia Drosos said in a statement.

For full-year 2022, Signet forecasts revenue of $6.8 billion to $6.95 billion, up from $6.50 billion to $6.65 billion prior. Analysts were expecting $6.73 billion, according to FactSet.

The company sees same-store sales growing 30%-33% for the full year, up from 24%-27% earlier. Analysts had forecast a 31.7% gain. It expects non-GAAP operating income of $618 million-$673 million, up from $490 million-$545 million earlier. Analysts were expecting $544 million.

But Signet remains “cautious regarding the impacts of the macro environment, particularly in the fourth quarter.”

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Signet Stock

Shares popped 8.5% to 87.50 early on the stock market today. If the gains hold in the regular session, Signet stock would top an 83.10 buy point off a cup base, according to MarketSmith chart analysis.

The relative strength line for Signet stock is just below the consolidation peak and it would be a bullish sign if it makes a new high as the stock breaks out.

On Thursday, the Bermuda-based jewelry company said it has expanded its share repurchase program to $225 million.

Year to date, Signet generated cash flow from operating activities of $458.5 million, more than $300 million from the same period last year.

“Our cash position reflects the efficiency and focus of our now 3.5 years of transformation,” CFO Joan Hilson said. And it “provides for further investment as we remain focused on our capital priorities to invest in our growth strategy.”

Looking ahead, Signet continues to expect a shift of consumer discretionary spending away from the jewelry category toward “experience-oriented categories” in the second half of this year. The Delta variant has added complexity in predicting the magnitude and timing of this shift, it said.

“As such, negative low-to-mid single digit same-store sales are implied in the fourth quarter,” it said.

Find Aparna Narayanan on Twitter at @IBD_Aparna.


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