Got a tip?: tips@bullonthestreet.com
Email: info@bullonthestreet.com

The Parent of Zales Diamond Sees Huge Share Jump After Reporting Earnings

Signet saw its shares explode after reporting better than expected second quarter results and an increased outlook for the full-year.

The stock’s gains led to the best day in over twenty years for the company, shooting up over 20%. The last time the company saw gains like this was in April of 1996.

Signet operates over 3,500 stores primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples, Piercing Pagoda, and JamesAllen.com.

For the second quarter, Signet reported adjusted earnings per share of 52 cents. Analysts were expecting just 20 cents. Revenue at $1.42 billion was also higher than the $1.34 billion that was expected. Same-store sales saw a surprise jump of 1.7% comapred to an expected decline of 4.5%.

CEO Virginia Drosos said during the earnings call, “We are still early in our transformation plan and continue to expect the vast majority of our operating profit to be generated in the fourth quarter while we have seen some improvement in the first half; we recognize there is still a lot of work ahead to deliver a successful holiday season.”

“We feel good about our holiday preparations, but recognize that we are making multiple changes in our business this holiday, including branding, product assortment and value equation.”

It was this past March that the world’s largest diamond retailer announced a three-year restructuring plan.

Due to the improved second quarter performance, Signet is “modestly raising” its financial outlook for the year, said Drosos.

Same-store sales are expected to be down 1.5 percent to flat. Previously Signet had forecast same-store sales was that they would be down in the low do mid single digits. Total sales are forecast be $6.2 billion to $6.3 billion compared to a previous estimate of $5.9 billion to $6.1 billion.

Signet is now expecting to lose $7.09 to $7.47 per share compared to the previous estimate of a loss of $7.30 to $7.90 a share. Adjusted earnings is forecast to be in the range of $4.05 to $4.40 a share range compared to a previous estimate of $3.75 to $4.25 a share.

“We are encouraged by our improving year-to-date performance as we execute against our Path to Brilliance transformation plan,” Drosos said.

“During the second quarter, we continued to see stabilization in same store sales, and we remain confident that we have the right strategies in place to continue to drive operational improvement over the long term.”

Signet has repurchased $485 million in shares since Jan. 1. According to the company this represents 14.6 percent of its outstanding shares.

Signet also announced that its CFO Michele Santana is planning to leave in 2019 after a successor has been appointed.

Santana, who was promoted to the role of CFO in 2014, stated, “I see this as the right time for me to move on to new challenges, and I look forward to facilitating a smooth transition.”

Leave a Comment