Inflation, Pressure on Consumers' Discretionary Spending Bite Into Signet Jewelers' Future Outlook

  • Diamond jewelry retailer Signet Jewelers Ltd SIG reported a second-quarter FY23 sales decline of 1.9% year-on-year to $1.755 billion, marginally beating the consensus of $1.75 billion. Same-store sales declined 8.2%.
  • North America segment sales amounted to $1.6 billion, a 1.8% decrease Y/Y. Same-store sales for the segment decreased 8.7% versus last year.
  • International segment same-store sales decreased 1.5%, and sales fell 14.6% Y/Y to $111.6 million.
  • Gross margin contracted 220 basis points to 37.9%.
  • Operating income for the quarter fell 17.1% Y/Y to $186.8 million, with an operating margin compressing 200 basis points to 10.6%.
  • Adjusted EPS of $2.68 beat the consensus of $2.59.
  • Signet used $(114.9) million in operating cash flow year-to-date and held cash and equivalents of $851.7 million as of July 30, 2022.
  • The company had an inventory of $2.2 billion at Q2-end.
  • Signet's Board declared a quarterly cash dividend of $0.20 per share for the third quarter, payable November 25, 2022, to shareholders of record on October 28, 2022. Approximately $622.4 million remains under the company's stock repurchase authorization.
  • Guidance: Signet expects Q3 sales of $1.46 billion - $1.49 billion, versus the consensus of $1.47 billion.
  • It reaffirmed its FY23 sales forecast of $7.60 billion - $7.70 billion, against the consensus of $7.73 billion.
  • SIG recently reduced its FY23 outlook citing heightened pressure on consumers' discretionary spending and increased macroeconomic headwinds.
  • Signet sees FY23 EPS of $10.98 - $11.57, above the Street view of $10.82.
  • Price Action: SIG shares are trading lower by 11.89% at $57.60 on the last check Thursday.
  • Photo Via Company
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