Why Diamond Jewelry Retailer Signet's Shares Are Gaining Today

Signet Jewelers Ltd SIG shares are trading higher by around 4% after it reported Q3 FY24 results. Sales declined 12.1% YY to $1.392 billion, marginally beating the analyst consensus of $1.390 billion. Same-store sales were down 11.8% versus last year.

North America segment sales amounted to $1.3 billion, an 11.9% decrease Y/Y. Same-store sales for the segment decreased 12.3% versus last year. International segment same-store sales decreased 4.6%, and sales fell 1.4% Y/Y to $94.0 million.

Gross margin of 36.0%, up 110 basis points Y/Y. The operating income for the quarter was $13.3 million versus $48.4 million last year, with an operating margin of 1.0%.

Adjusted EPS of $0.24 beat the analyst consensus estimate of $1.18. 

"Trends through Black Friday weekend, including sequential improvement in engagement trends, are performing in line with guidance expectations for the fourth quarter. As we enter the holiday season, jewelry remains a top of mind gifting category for consumers in a value conscious shopping environment," commented Virginia C. Drosos, CEO. 

Signet's operating cash flow used year-to-date was $(205.3) million versus $(155.5) million in the prior year. It held cash and equivalents of $643.8 million as of October 28, 2023.

Inventory ended the quarter at $2.1 billion, approximately 14% below Q3 of FY23.

Related: Signet Jewelers' Engagement Sales Set to Rebound In Q4: Analyst Asserts

Dividend: Signet's Board declared a quarterly cash dividend of $0.23 per share, payable on February 23, 2024, to shareholders of record on January 26, 2024.

As of December 1, Signet has repurchased approximately 1.8 million shares for $128.5 million, including $35.1 million during the third quarter. It had shares around $672 million remaining under the multi-year authorization.

Guidance: Signet expects Q4 sales of $2.40 billion - $2.60 billion, versus the consensus of $2.55 billion.

SIG lowered the outlook for FY24 sales to $7.07 billion - $7.27 billion from $7.10 billion - $7.30 billion (vs. consensus of $7.22 billion).

Signet revised FY24 adjusted EPS outlook to $9.55-$10.18 from $9.55 - $10.14, against the Street view of $9.81.

"Cost savings initiatives are on track and healthy inventory enables product newness as we enter the holiday season and improved free cash flow, allowing Signet to return nearly $160 million to shareholders already this year," said Joan Hilson, Chief Financial, Strategy & Services Officer.

Price Action: SIG shares are up 3.73% at $87.95 on the last check Tuesday.

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