Shining Through Challenges: Signet Jewelers Reports Mixed Q1 Results, Optimistic Outlook

Signet Jewelers Ltd SIG shares are ticking lower after the company reported its first-quarter FY25 earnings and outlook.

The company reported a first-quarter FY25 sales decline of 9.5% year-on-year to $1.510 billion, missing the analyst consensus estimate of $1.514 billion.

North America segment sales amounted to $1.42 billion, a 9% decrease Y/Y. Same-store sales for the segment decreased 9.2% versus last year.

International segment same-store sales decreased 3.2%, and sales fell 17% Y/Y to $77.2 million.

Gross margin of 37.9% stayed flat Y/Y. The operating income for the quarter was $49.8 million versus $101.7 million last year, with an operating margin of 3.3%, down from 6.1% last year.

Adjusted EPS of $1.11 beat the consensus estimate of $0.85.

Signet’s operating cash flow used in the quarter was $158.2 million versus $381.8 million used in the prior year. It held cash and equivalents of $729.3 million as of May 4.

Signet’s Board declared a quarterly cash dividend of $0.29 per share, payable August 23 to shareholders of record on July 26.

In the first quarter, Signet repurchased approximately 73,000 common shares at an average cost per share of $101.10, or $7.4 million. The company had a net debt of $(253.5) million as of May 4, 2024.

“Our results reflect notable acceleration from a sluggish February to the top half of expectations, with an even stronger May…We expect continued momentum in the second quarter, leading to a positive same store sales inflection in the second half of Fiscal 25,” said Chief Executive Officer Virginia C. Drosos.

Guidance: Signet expects second-quarter sales of $1.46 billion – $1.52 billion, versus the consensus of $1.508 billion. Same store sales decline of (6)% – (2)%.

SIG reaffirms FY25 sales outlook of $6.66 billion – $7.02 billion, against the consensus of $6.836 billion. Same store sales of (4.5)% to 0.5%.

Signet expects FY25 adjusted EPS of $9.90 – $11.52, against the Street view of $10.55.

The company continues to expect a three-year recovery in U.S. engagement rates, with fiscal 2025 engagement incidents increasing 5% to 10% to fiscal 2024.

Price Action: SIG shares are trading lower by 1.31% at $107.00 in premarket at the last check Thursday.

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