World’s Leading Diamond Retailer’s Sales Rise 8.9% in Q1

Source: Streetwise Reports   06/09/2022

Signet Jewelers Ltd. shares traded 9% higher after the company reported Q1/23 financial results and reaffirmed its FY/23 estimates for total revenue and non-GAAP operating income.

The world’s largest diamond jewelry retailer Signet Jewelers Ltd. (SIG:NYSE), which operates more than 2,800 stores in the U.S., Canada, Ireland, and the U.K. under several well-known brand name stores including Kay Jewelers, Zales, Jared, and Banter by Piercing Pagoda, among others, today announced financial results for its first quarter of 2023 ended April 30, 2022.

The company’s CEO Virginia C. Drosos commented, “Signet’s strong performance this quarter reflects our team’s successful execution and agility amidst retail headwinds…We generated nearly 9% topline growth, including 2.6% organic sales growth, enabled by our healthy inventory position, connected commerce capabilities and data-driven marketing.”

Signet Jewelers’ Chief Financial and Strategy Officer Joan Hilson added, “We are reaffirming our annual guidance and expanding our share repurchase authorization by $500 million…While we anticipated and experienced softening within lower price points resulting from heightened inflation and the lack of stimulus, we delivered offsets through tailored assortments, digital capabilities and enhanced services to maintain higher average transaction values.”

The firm highlighted that in Q1/23 total sales increased by 8.9% to $1.84 billion, compared to $1.69 billion in Q1/22. The company noted also that same store sales (SSS) in the quarter rose by 2.5% year-over-year.

Signet Jewelers advised that for Q1/23 it recorded GAAP operating income of $0.2 million, compared to GAAP operating income of $168.7 million during Q1/22. The firm indicated that the decrease was attributed to the impact of charges associated with the resolution of previously announced litigation.

The company reported that for Q1/23 it posted a GAAP net loss of $1.89 per diluted share, versus a net profit of

$2.23 per diluted share in Q1/22. The firm stated that the decrease in earnings per share (EPS) was due to legal expenses of $2.92 per share combined with $2.36 per share related to the buy-out of effectively all of the U.K. pension plan obligations and adjustments to the fair value of acquired inventory.

Signet stated that on a non-GAAP basis. it registered operating income of $194.6 million in Q1/23, compared to $168.9 million in Q1/22. The company listed additionally that during Q1/23 it posted non-GAAP diluted EPS of $2.86, versus $2.23 in Q1/22.

The firm mentioned that during Q1/23 it had repurchased a total of $318.2 million of its own shares under previously authorized corporate share repurchase agreements. The company advised that its Board of Directors has approved a quarterly dividend of $0.20 per share for Q2/23 payable on August 26, 2022, to shareholders of record as of July 29, 2022.

The company advised that due to a higher average transaction value (ATV), total sales in North America during Q1/23 increased by 5.4% y-o-y to $1.7 billion but noted that SSS were down by 0.9% versus Q1/22 based upon a smaller overall number of transactions.

Signet listed that total international sales in Q1/23 rose by 91.6% y-o-y to $110.0 million. The company explained that the large gains were the result of lifting of store operating restrictions, higher ATV and an increase in the number of transactions.

The company offered some forward guidance and advised that it is confirming its FY/23 (non-GAAP) business outlook. Signet stated that for Q2/23 it expects total revenue of 1.79-1.82 billion and operating income of $188-204 million. For FY/23 the firm said that it expects total revenue of $8.03-8.25 billion, operating income of $921-974 million and diluted EPS of $12.72-13.47.

Signet is headquartered in Hamilton, Bermuda and claimed to be the world’s biggest retailer of diamond jewelry. The company operates over 2,800 retail stores in the U.S., Canada and Great Britain under its household brand names Banter by Piercing Pagoda, Jared, Kay Jewelers and Zales, Diamonds Direct, H. Samuel and others.

Signet Jewelers began the day with a market cap of around $2.9 billion with approximately 47.4 million shares outstanding and a short interest of about 15%. SIG shares opened more than 5% higher today at $65.56 (+$3.36, +5.40%) over yesterday’s $62.20 closing price. The stock has traded today between $64.95 and $69.75 per share and closed for trading at $67.93 (+$5.63, +9.05%).

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