Why Signet Jewelers Shares Are Plunging Today

Signet Jewelers Ltd SIG reported a first-quarter FY24 sales decline of 9.3% year-on-year to $1.67 billion, beating the analyst consensus estimate of $1.65 billion. Same-store sales were down 13.9% versus last year.

North America segment sales amounted to $1.56 billion, an 8.4% decrease Y/Y. Same-store sales for the segment decreased 14.2% versus last year.

International segment same-store sales decreased 8.5%, and sales fell 15.5% Y/Y to $93 million.

Gross margin contracted 150 basis points to 37.9%. The operating income for the quarter was $101.7 million versus $0.2 million last year, with an operating margin of 6.1%.

Adjusted EPS of $1.78 beat the consensus of $1.49.

Signet's operating cash flow used for the quarter was $(381.8) million versus $(135.5) million in the prior year. It held cash and equivalents of $655.9 million as of Jan. 28, 2023.

Signet's Board declared a quarterly cash dividend of $0.23 per share, payable on Aug. 25, 2023, to shareholders of record on Jul. 28, 2023.

The company had an inventory of $2.2 billion at year-end.

"Our updated Fiscal 2024 guidance reflects a recent deceleration of trends that have persisted into the second quarter, including a softer than expected Mother's Day, increasing macro-economic pressures on consumers at more price points, and deeper competitive discounting," said Joan Hilson, Chief Financial, Strategy and Services Officer.

Signet's quarterly cash dividend on common shares of $0.23 per share for the second quarter is payable Aug. 25, 2023, to shareholders of record on Jul. 28, 2023.

Guidance: Signet expects Q2 sales of $1.53 billion - $1.58 billion, below the consensus of $1.75 billion.

It cut FY24 sales outlook to $7.10 billion - $7.30 billion from $7.67 billion - $7.84 billion, against the consensus of $7.73 billion. Signet lowered FY24 adjusted EPS outlook to $9.49 - $10.09 from $11.07 - $11.59, with the Street view of $11.11.

Price Action: SIG shares are trading lower by 10.3% at $62.35 in premarket on the last check Thursday.