Earnings preview: What to expect when Signet Jewelers reports Q2 results

Signet Jewelers Limited (NYSE: SIG) is slated to report second quarter 2020 earnings results on Thursday, September 5, before the opening bell. Analysts expect the company to report earnings of $0.24 per share on revenue of $1.34 billion.

The company has seen declines in sales trends due to softness in retail traffic as well as a tough competitive environment. Same-store sales have dipped in the past two quarters owing to higher expenses and unproductive stores. Negative impacts from foreign currency have also hurt the topline numbers.

This scenario is not expected to change significantly in the second quarter and the above factors are expected to cause a 5% year-over-year decline in sales. Higher costs are also expected to put pressure on the bottom line results.

However the company’s cost-reduction efforts and its Path to Brilliance transformation initiatives are likely to help drive growth going forward. In fiscal year 2020, Signet expects to achieve cost savings of $70-80 million.

Signet is also closing several of its stores in order to streamline its operations and drive efficiencies. In FY20, the company expects to close approx. 150 stores and reduce its store base by 13% by the end of the year.

In the first quarter of 2020, Signet’s revenue and earnings surpassed market expectations despite posting year-over-year declines. Sales fell 3% to $1.43 billion while adjusted EPS dropped 20% to $0.08. Same-store sales declined 1.3%.

Also see: Signet Q1 2020 Earnings Call Transcript

For the second quarter of 2020, Signet has guided for total sales of $1.35 billion to $1.37 billion. Same store sales are expected to be down 3.5% to 2.5%. GAAP earnings are expected to range from a loss of $0.10 per share to earnings of $0.07 per share. Adjusted EPS is expected to be $0.23-0.30.

For fiscal-year 2020, total sales is estimated to be $6 billion to $6.06 billion. Same-store sales is expected to be down 2.5% to 1.5%. GAAP EPS is expected to be $1.88-2.38 and adjusted EPS is expected to be $2.88 to $3.17.

Signet’s shares have fallen 65% so far this year and 42% over the past three months. The stock has an average price target of $19.33.

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