Diamond Jewelry Retailer Signet Outshines Q2 Estimates; Expects Engagements To Begin Their Recovery

Signet Jewelers Ltd SIG reported a second-quarter FY24 sales decline of 8.1% year-on-year to $1.61 billion, beating the analyst consensus of $1.58 billion. Same-store sales were down 12% versus last year.

North America segment sales amounted to $1.50 billion, an 7% decrease Y/Y. Same-store sales for the segment decreased 12.2% versus last year.

International segment same-store sales decreased 8.4%, and sales fell 8.6% Y/Y to $102 million.

Gross margin of 37.9% stayed flat Y/Y. The operating income for the quarter was $90.2 million versus $186.8 million last year, with an operating margin of 5.6%.

Adjusted EPS of $1.55 beat the analyst consensus estimate of $1.45. 

Signet's operating cash flow used year-to-date was $(253.3) million versus $(114.9) million in the prior year. It held cash and equivalents of $690.2 million as of July 29, 2023.

Signet's Board declared a quarterly cash dividend of $0.23 per share, payable on November 24, 2023, to shareholders of record on October 27, 2023.

The company had an inventory of $2.1 billion at Q2 end.

"We're reaffirming our full year revenue and non-GAAP operating income guidance today as we anticipate the current macro trends will continue and engagements will begin their recovery. Additionally, we are increasing our EPS guidance to reflect second quarter share repurchases," said Joan Hilson, Chief Financial, Strategy and Services Officer.

Guidance: Signet expects Q3 sales of $1.36 billion - $1.41 billion, versus the consensus of $1.4 billion.

SIG continues to see FY24 sales of $7.10 billion - $7.30 billion, against the consensus of $7.18 billion. Signet raised FY24 adjusted EPS outlook from $9.49 - $10.09 to $9.55 - $10.14, against the Street view of $9.42.

Price Action: SIG shares are trading higher by 1.60% at $72.60 in premarket on the last check Thursday.