Signet (SIG) Q3 Earnings Surpass Estimates, Sales Down Y/Y
Signet Jewelers Limited SIG posted better-than-expected results in third-quarter fiscal 2024. Both sales and earnings declined from the year-ago fiscal quarter’s readings. Also, same-store sales dropped 11.8% from the year-earlier quarter’s reading.
This Zacks Rank #3 (Hold) player’s shares have gained 15.4% in the past three months compared with the industry’s 10.1% growth.
Quarterly Details
Signet reported adjusted earnings of 24 cents per share, beating the Zacks Consensus Estimate of earnings of 15 cents per share. The bottom line decreased from 74 cents per share earned in the year-ago fiscal quarter.
This jewelry retailer generated total sales of $1,391.9 million, ahead of the consensus estimate of $1,376 million. The top line dipped 12.1% from the prior-year fiscal quarter’s tally due to soft same-store sales. The metric declined 12.4% at constant currency.
Signet Jewelers Limited Price, Consensus and EPS Surprise
Signet Jewelers Limited price-consensus-eps-surprise-chart | Signet Jewelers Limited Quote
A Sneak Peek Into Margins
The gross profit in the fiscal third quarter amounted to $501.3 million, down from $552.6 million in the year-ago fiscal comparable quarter.
SG&A expenses were $484.2 million, down from $501.7 million in the prior fiscal year’s comparable quarter. SIG reported an adjusted operating income of $23.9 million, down from $57.9 million recorded in the year-ago fiscal quarter. As a rate of sales, the adjusted operating margin decreased 200 basis points to 1.7%.
Segment Discussion
Sales in the North American segment fell 11.9% from the year-ago fiscal quarter’s number to $1.3 billion. Same-store sales tumbled 12.3% from the year-ago fiscal quarter’s levels reflecting a fall in the number of transactions year over year, somewhat offset by higher average transaction value ("ATV").
Sales in the International segment dropped 1.4% from the year-earlier fiscal quarter’s reading to $94 million. Same-store sales slipped 4.6% from the year-ago fiscal quarter’s tally, reflecting the impacts of increased ATVs and lower transactions. Sales fell 8.5% on a constant currency basis.
Financial Details
Signet ended the fiscal third quarter with cash and cash equivalents of $643.8 million, accounts receivable of $10.9 million and inventories of $2,095.7 million. Total shareholders’ equity was $1,572.2 million at the end of the fiscal third quarter.
As of Oct 28, 2023, Signet used net cash of $205.3 million from operating activities. SIG had a negative free cash flow of $294.7 million as of Oct 28, 2023.
Signet completed a shares buyback of $35.1 million in the fiscal third quarter. We note that Signet had 2,747 stores as of Oct 28, 2023.
Guidance
Signet issued guidance for the fourth quarter and fiscal 2024, which is a 53-week fiscal year. For the fourth quarter, it projects total sales in the band of $2.40-$2.60 billion and operating income in the range of $397-$437 million. The company estimated sales for the 53rd week between $80 million and $100 million. It updated the strategic sale of 15 luxury watch stores in the U.K. in the impending quarter, comprising nearly $25 million of revenues and $5 million of operating income.
For the fiscal year, it projects total sales in the band of $7.07-$7.27 billion compared with $7.84 billion delivered in fiscal 2023. The operating income is anticipated to be in the range of $630-$670 million, versus $850.4 million recorded in the last fiscal year. Earnings per share (EPS) are envisioned in the bracket of $9.55-$10.18 compared with $11.80 earned in fiscal 2023.
Management expects capital investments of up to $200 million, with the investments in banner differentiation including stores, connected-commerce capabilities, digital and technology upgrades.
The company’s guidance is based on assumptions, including the persistent headwinds in engagements with recovery in the fourth quarter and an annual tax rate of around 19%. We note that bridal overall, inclusive of engagements, historically reflects nearly 50% of the company’s merchandise sales. It expects a certain shift in consumer discretionary spending from the jewelry category.
Key Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch ANF, American Eagle Outfitters AEO and Boot Barn BOOT.
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 0.5% and 526.3%, respectively, from the year-ago reported figures. ANF delivered an earnings surprise of 107.7% in the last reported quarter.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 82.6% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 3.3% and 24.2%, respectively, from the year-ago reported figures.
Boot Barn, a fashion retailer of apparel and accessories, currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 8.2% and 9.1%, respectively, from the year-ago reported figures.
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