Signet Jeweler continues to shine in Q2; sales top pre-pandemic levels
Signet Jewelers maintained its momentum in the second quarter as its comeback continued with earnings that crushed Street expectations.
The parent company of Kay Jewelers, Zales, Jared and other banners reported net income of $216.0 million, or $3.60 a share, for the quarter ended July 31, compared to a loss of $90.0 million, or $1.73 a share, in the year-ago period when its sales were impacted by closed stores amid the pandemic. Adjusted earnings per share were $3.57, blowing past analysts’ estimates of $1.70.
Total sales surged 101.4%, or more than $900 million, to $1.79 billion, topping estimates of $1.65 billion. Total sales were up more than $423 million over the same quarter two years ago (pre-pandemic).
Same-store sales (including store and digital) jumped 97.4% over the year-ago period. Same-store sales rose 38.1% over two years ago despite the company having roughly 450 fewer stores, a 16% reduction in store count. The average transaction value in North America increased 10.0% and the number of transactions increased 70.1% compared to the year-ago period.
During the quarter, Signet piloted new branding for Piercing Pagoda that included a new name: Banter by Piercing Pagoda. Based on promising results, rebranding has been expanded from the initial 100 stores to a total of 200 locations, Signet CEO Virginia C. Drosos told analysts on the company’s earnings call. The company also launched a new website for the brand.
“Our e-commerce penetration [for Piercing Pagoda] has historically been among the lowest of our banners,” Drosos said. “Results of this new site are still very early, but encouraging. Online traffic has doubled, and interaction times on the site have increased 25%.”
Signet expects to close more than 100 stores in its current fiscal year and open up to 100 locations, primarily in its “highly-efficient” Piercing Pagoda formats.
“Our Signet team delivered strong second-quarter top and bottom-line performance with continued execution of our Inspiring Brilliance strategy, enabling us to maximize jewelry category strength and capture share over the last year," Drosos said in a statement. "Our performance this quarter demonstrates that our banner value propositions, product newness, always-on marketing and connected commerce experiences are resonating with new and loyal customers.”
Signet raised its earnings per share guidance for fiscal 2022 to $6.80 to $6.95 from $6.50 to $6.65 and its same-store sales growth outlook to 30% to 33% from 24% to 27%. Signet also expanded its share repurchase program to $225 million.
"We are raising our guidance for the year reflecting our business strength and confidence in our growth strategy while remaining cautious regarding the impacts of the macro environment, particularly in the fourth quarter,” Drosos said.
The company has expanded its share repurchase authorization to $225 million, reflecting the company's confidence in its long-term growth opportunities, said CFO and strategy officer Joan Hilson.
Signet operates approximately 2,800 stores primarily under the name brands of Kay Jewelers, Zales, Jared, H.Samuel, Ernest Jones, Peoples, Piercing Pagoda, and JamesAllen.com. It is the world's largest retailer of diamond jewelry.
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