Signet’s stock gains as Q1 results surpass expectations

Signet Jewelers Limited (NYSE: SIG) reported better-than-expected revenue and earnings for the first quarter of 2020, sending shares climbing 3.5% in premarket hours on Thursday.

Total revenue of $1.43 billion was down 3.3% from the same period last year, but ahead of the estimates of $1.42 billion. Same-store sales dropped 1.3% while eCommerce sales rose 5.3%.  

On a GAAP basis, net loss attributable to common shareholders was $18.2 million, or $0.35 per share, compared to $504.8 million, or $8.48 per share, last year. Adjusted EPS totaled $0.08 versus the forecasts for a loss of $0.23 per share.  

Signet reported year-over-year sales declines in its North America and International segments. The company saw sales fall across most of its categories with the exception of Piercing Pagoda which recorded an 11% growth in sales.

Same-store sales in North America fell 0.9%. Average transaction value (ATV) rose 1.3% while the number of transactions fell 2.3%. International same-store sales decreased 5.2%. ATV rose 0.2% while the number of transactions dropped 5.4%.  

For the second quarter of 2020, Signet expects 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.

In fiscal-year 2020, Signet expects to achieve cost savings of $70-80 million. The company expects to generate $200-225 million of cost savings from its transformation plan during the period from 2019 to 2021. This includes $85 million achieved in fiscal year 2019.

In FY20, the company expects to close approx. 150 stores, with 44 closures during Q1 2020 and limited new store openings for the full year. By the end of fiscal-year 2020, Signet expects to reduce its store base by 13% over the three-year period from fiscal years 2018 to 2020.

Signet declared a quarterly cash dividend of $0.37 per share for the second quarter of 2020, payable on August 30, 2019 to shareholders of record on August 2, 2019, with an ex-dividend date of August 1, 2019.

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