Signet Jewelers Issues Weak Q2 Forecast, Shares Drop

Shares of

tumbled over 6 percent in pre-market trading after the company issued a weak earnings forecast for the current quarter. For the second quarter, Signet projects adjusted earnings of $1.11 to $1.16 per share, versus analysts' estimates of $1.19 per share. Signet projects same-store-sales to rise 2 percent to 3 percent. The Hamilton, Bermuda-based company posted a quarterly profit of $118.8 million, or $1.48 per share, versus a year-ago profit of $96.6 million, or $1.20 per share. Excluding items, the company's adjusted earnings came in at $1.62 per share. Its sales surged 44.9 percent year-over-year to $1.53 billion. However, analysts were expecting a profit of $1.63 per share on revenue of $1.54 billion. The average estimate among 4 Estimize users was for a loss of $1.62 per share and revenue of $1.55 billion. Its same store sales rose 3.6 percent in the quarter, versus a 3.3 percent growth in the year-ago quarter. eCommerce sales in the first quarter jumped 98.7 percent to $76.9 million from $38.7 million. Same-store sales climbed 6.2 percent in its U.K. division, while same-store sales rose 5.6 percent in its Zale division. Same store sales climbed 2.3 percent at its Sterling division. Gross margin for the latest quarter climbed to $565.9 million, versus $407.2 million in the year-ago quarter. During the quarter, the company repurchased 160,298 shares at an average cost of $136.84 per share. At May 2, 2015, the company had $122.6 million in cash and cash equivalents, versus $249.1 million as of May 3, 2014. Mark Light, Chief Executive Officer of Signet, said, "We continue to see favorable progress of our integration of the Zale division. As we implement new operating initiatives and deploy incremental capital resources, the Zale division has begun, as expected, to grow its same store sales faster than Signet overall. We expect this trend to continue, and we remain well-positioned to meet our goal of $150 million to $175 million in cumulative 3-year operating profit synergies by the end of January 2018." Signet shares fell 6.10 percent to $125.06 in pre-market trading.