Signet Sparkles on Brilliant Holiday Sales, Raised Guidance

Signet Jewelers surges after the jewelry retailer reports stunning holiday sales and lifts its fiscal fourth-quarter and full-year guidance.
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Shares of jewelry retailer Signet Jewelers (SIG) - Get Report surged more than 40% Thursday after the company reported that same-store sales over the holiday shopping season were stronger than expected, and that it was raising its fiscal fourth-quarter and full-year guidance as a result.

Signet stock soared 42.46%, or $9.12 a share, rising to $30.60 in morning trading after the company reported that same-store sales rose by 1.6% over the nine weeks ended Jan. 4, with e-commerce sales up a healthy 13.5%.

“We delivered holiday same-store sales growth ahead of our guidance as we continued to implement year two of our Path to Brilliance transformation,” CEO Virginia Drosos said in a statement. “Product newness, investments in our digital capabilities, and more targeted marketing campaigns drove both e-commerce and brick-and-mortar growth in North America.”

The owner of Kay, Zales and Jared also lifted its fiscal fourth-quarter and full-year earnings and sales guidance, saying it now expects per-share earnings of between $3.44 and $3.52 for its fiscal fourth quarter, well above current Wall Street consensus estimates of $3.11.

Fiscal fourth-quarter operating income is now expected to ring in at between $254 million and $259 million, while same-store sales are expected to rise 1.1% on revenue of $2.12 billion.

For fiscal 2020, Signet said it now expects per-share earnings of between $3.61 and $3.69 on revenue of $6.1 billion, and operating income of between $302 million and $307 million.  Same-store sales are seen rising 0.1%.

To be sure, Signet continues to focus on its ‘Path to Brilliance,” which includes streamlining its operations and expenses and reinvigorating its lineup of products to better appeal to its target consumer markets.

As part of that effort, the company plans to close some 165 stores in fiscal 2020 and open 38, resulting in a higher net store reduction of 127 stores vs. prior guidance of 115. Net selling square footage is now expected to decline approximately 2.7%.

Total savings from all of its cost-cutting measures are expected to increase to between $80 million and $90 million vs. prior guidance of between $70 million and $80 million.