Signet Jewelers (SIG): A few points to note on the Q2 performance

Shares of Signet Jewelers Limited (NYSE: SIG) were up over 4% on Friday. The stock has gained 15% year-to-date. The company reported its second quarter 2024 earnings results a day ago which, despite declining year-over-year, surpassed projections. Here are a few points to note on the quarterly performance:

Sales and profits

Signet saw its sales and profits decline in the second quarter of 2024 compared to the same period a year ago, but despite the declines, both the top and bottom line numbers surpassed market estimates.

Total sales decreased 8.1% year-over-year to $1.6 billion. Same-store sales were down 12%. Signet recorded sales declines across both its segments, with sales in the North America segment falling by 7.1% and International segment sales dropping by 8.6%. Same-store sales were down 12% for North America and 8% for International.

GAAP net income decreased 51% to $66.5 million while EPS declined 47% to $1.38. Adjusted EPS fell 42% to $1.55 compared to last year.

Challenges and opportunity

Signet has faced challenges with regards to pressure on discretionary purchases in a tough macro environment as well as a drop in engagements caused by a pandemic-driven disruption in dating. However, the company is seeing a modest improvement in these trends with a pickup in customer traffic and purchase behavior.

Bridal makes up a significant part of Signet’s business and provides opportunity for continued sales as customers who make bridal purchases tend to return for anniversary and holiday gift purchases. On its quarterly conference call, the company said it sees bridal as a $600 million revenue growth opportunity.

As engagements begin recovering from the fourth quarter and fully rebound over the next three years, Signet sees an opportunity for over $500 million in revenue from engagement rings alone. It is working on growing its market share in bridal and creating competitive advantage in jewelry gifting.

Outlook

Signet anticipates the pressure on consumer discretionary spend will continue and expects annual US jewelry industry revenues to drop further than its earlier expectation of mid-single-digits.

For the third quarter of 2024, Signet expects total sales of $1.36-1.41 billion. For the full year of 2024, total sales are expected to be $7.10-7.30 billion and EPS to be $9.55-10.14.