Signet Jewelers, renowned for its prestigious store chains like Kay Jewelers and Zales, reported its fiscal second-quarter results on Thursday, revealing a decline in performance yet surpassing market expectations in terms of earnings. The company exhibited adjusted earnings of $1.25 per share for the quarter closing on August 3, a decrease from $1.55 during the same period last year.
This performance exceeded the consensus estimate provided by Capital IQ, which stood at $1.21. However, sales experienced a downward trend, declining by 7.6% to reach $1.49 billion, narrowly missing the Street's projection of $1.5 billion. Same-store sales saw a reduction of 3.4%, contrasting with the projected 4.3% decrease that was anticipated by analysts surveyed by Capital IQ.
Nevertheless, Chief Executive Virginia Drosos highlighted a significant achievement, stating that the company accomplished its "fifth consecutive quarter of sequential same-store sales improvement." This measure improved by over five points compared to the prior three-month period and was noted to be "turning positive" based on current quarter-to-date performance, Drosos added. Looking ahead, Signet anticipates third-quarter sales in the range of $1.35 billion to $1.38 billion, with same-store sales projected to fluctuate between a modest 1% decrease and a slight 1.5% gain.
Drosos remarked, "Our strategy to accelerate new merchandise at the right price points is capturing customer demand and driving merchandise margin expansion," which contributed to a remarkable 13% surge in Signet's shares during premarket activity. Despite the positive earnings, revenue in North America experienced a decline, slipping 6.9% to $1.4 billion, while comparable sales dropped by 3.7%.
International sales also faced challenges, plummeting 15% to $86.5 million, notwithstanding a 1.7% improvement in same-store sales. Signet attributed these declines to a decrease in customer transactions across both segments. The diamond jewelry retailer remains optimistic, continuing to project adjusted earnings per share (EPS) in the range of $9.90 to $11.52 for the fiscal year 2025.
Furthermore, the company reaffirmed its sales guidance, estimating a total sales range between $6.66 billion and $7.02 billion, with same-store sales expected to reflect a decline between 4.5% and a marginal increase of 0.5%. Drosos emphasized, "Both the internal and external metrics we track indicate increasing engagements as we head into the back half of the year.
This combined with growth in new high-margin fashion merchandise and services gives us confidence in delivering our annual guidance.” For the ongoing quarter, expectations remain optimistic, with sales anticipated between $1.35 billion and $1.38 billion, while analysts forecast consistent sales at $1.35 billion.
Same-store sales are expected to reflect a range from a 1% decrease to a 1.5% gain..