Signet Jewelers Q3 tops estimates; raises outlook

Signet Jewelers reported better-than-expected earnings for its third quarter and also raised its full-year sales and earnings outlook as demand for its higher-end or “accessible luxury” jewelry helped blunt softening sales from lower-income shoppers.

The parent company of Zales, Kay Jewelers and other brands reported adjusted earnings of $0.74 for the quarter ended Oct. 29, down from $1.43 in the year-ago period. Analysts polled by Thomson Reuters were expecting $0.31 per share.

Total sales rose 2.9% (up 4.2% on a constant currency basis) to $1.6 billion. Same-store sales fell 7.7% compared to the year-ago quarter, which had “heightened” sales, resulting in part from government benefit programs and Signet’s strategic transformation including marketing initiative, the company said.

In August, Signet said it was acquiring digitally native jewelry retailer Blue Nile for $360 million in an all-cash deal  in a move to boost its online offerings and  bring in a younger, more affluent and ethnically diverse customer base into the company’s stable.

“Our strong third quarter results exceeded guidance and evidence why we believe Signet is uniquely positioned to deliver consistent market share growth and value creation," said CEO Virginia C. Drosos. "Our financial strength and flexible operating model are enabling continued strategic investments that are widening our competitive advantages. We have acquired 22.5 million new customers over the past five years, driving revenue and market share growth, and these customers are younger, more affluent and highly diverse with meaningful lifetime purchasing power. “

Signet is not troubled by the excess inventory problems that are plaguing some other retailers.

"We are entering this holiday season with the healthiest and most consumer-inspired inventory in our history — down 2% despite tiering up our accessible luxury offering and with clearance at the lowest levels since our transformation began, excluding acquisitions,” said chief financial and strategy officer Joan Hilson.

Hilson added that nearly all of Signet’s inventory is immediately available to customers whenever, wherever and however they choose to browse, shop and buy with us which is driving inventory turns nearly double pre-transformation levels."

Signet said it was raising its full-year guidance to reflect current business trends and its recent acquisition of Blue Nile. The company now expects sales to range from $7.77 billion in $7.84 billion in fiscal 2023, compared with its prior forecast of $7.60 billion to $7.70 billion. 

Annual adjusted earnings are expected to be between $11.40 and $12 a share, up from its previous guidance of between $10.98 and $11.57 a share.

Signet operates approximately 2,800 stores primarily under the name brands of Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, JamesAllen.com, Blue Nile, Peoples, H. Samuel, Ernest Jones and the jewelry subscription service, Rocksbox.