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Signet Q2 Earnings Top Estimates, Same-Store Sales Decline Y/Y
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Signet Jewelers Limited (SIG - Free Report) posted second-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, both revenues and earnings declined year over year. Also, same-store sales fell 3.4% from the year-ago period. Same-store sales are being impacted by Digital Banners, resulting in a decline of approximately 150 basis points (bps).
In the second quarter of fiscal 2025, Signet focused on several strategic initiatives. The company emphasized increasing its merchandise margin and average transaction value (ATV) by introducing innovative and trendy products, leading to a 50% rise in new merchandise revenues.
Signet expanded its Fashion and Bridal categories while maintaining inventory discipline. It also saw continued growth in its services sector, particularly with extended service agreements. Engagement recovery gained traction, with units improving by approximately 400 basis points. Investments in marketing, e-commerce enhancements and store renovations were the key elements to drive growth heading into the holiday season.
This Zacks Rank #4 (Sell) player’s shares have lost 0.3% in the past three months compared with the industry’s 13% decline.
Signet Jewelers Limited Price, Consensus and EPS Surprise
Signet reported adjusted earnings of $1.25 per share, beating the Zacks Consensus Estimate of $1.13. The bottom line decreased 19.4% from $1.55 in the year-ago quarter.
This jewelry retailer generated total sales of $1,491 million, surpassing the consensus estimate of $1,490 million. However, the top line fell 7.6% year over year. The metric also declined 7.6% at constant currency.
Insight Into SIG’s Margins & Expenses
The gross profit in the fiscal second quarter amounted to $533.6 million, down 7.3% from $610.8 million in the year-ago quarter. The gross margin increased 10 bps year over year to 38% in the quarter under review.
This increase was driven by a 120-bps improvement in the merchandise margin due to a higher mix of Services and Fashion revenues, partially offset by increased fixed costs like store occupancy.
Selling, general and administrative (SG&A) expenses were $498.4 million, down 2.5% from $511.2 million in the prior-year quarter. Meanwhile, SG&A expenses, as a percentage of sales, stood at 33.4%, which rose 170 bps year over year. This change resulted from fixed cost deleverage.
SIG reported adjusted operating income of $68.6 million, down from $102.7 million in the year-ago quarter. As a rate of sales, the adjusted operating margin decreased 180 basis points to 4.6%.
Image Source: Zacks Investment Research
Update on Signet’s Segmental Performance
Sales in the North American segment fell 6.9% year over year to $1.4 billion. This decline was caused by a 1.6% year-over-year rise in the ATV on a lower number of transactions. Same-store sales tumbled 3.7% year over year.
Sales in the International segment decreased 15.2% year over year to $86.5 million due to a 13.4% reduction in ATV, influenced by the sale of prestige watch stores, coupled with fewer transactions. Same-store sales slipped 1.7% year over year. Sales fell 15.8% on a constant-currency basis.
The Zacks Consensus Estimate of net sales for the North American and International segments was pegged at $1.3 billion and $73 million, respectively, in the quarter under review.
Update on SIG's Stores
As of Aug. 3, 2024, the North American segment had 2,401 stores, a decrease from 2,411 in February 2024 due to 3 openings and 13 closures. The International segment had 267 stores, down from 287 after 20 closures and no openings. Overall, Signet had 2,668 stores, down from 2,698 following 3 openings and 33 closures.
Signet ended the fiscal second quarter with cash and cash equivalents of $403.1 million, and inventories of $1.98 billion. Total shareholders’ equity was $1.92 billion at the end of the fiscal second quarter.
As of Aug. 3, 2024, it used net cash of $114.4 million in operating activities.
In the second quarter, it repurchased approximately 441,000 common shares at an average price of $90.35 per share, totaling $39.8 million. At the end of the second quarter, the company had $813.8 million remaining under its share repurchase authorization.
Signet’s FY25 Guidance
For the third quarter of fiscal 2025, the company projects total sales between $1.345 billion and $1.380 billion, with same-store sales between a decline of 1% and an increase of 1.5%. Adjusted operating income is forecast between $8 million and $25 million, while adjusted EBITDA is anticipated between $55 million and $72 million.
The gross margin is expected to expand modestly, while SG&A is likely to experience some deleveraging due to the shift of marketing spend into the third quarter ahead of the upcoming election.
For fiscal 2025, the company expects total sales of $6.66-$7.02 billion and same-store sales between a decline of 4.5% and an increase of 0.5%. Adjusted operating income is projected between $590 million and $675 million, with adjusted EBITDA between $780 million and $865 million. Adjusted diluted EPS is forecast at $9.90-$11.52.
The guidance assumes up to 5% growth in engagements, robust fashion sales and a modest improvement in digital trends. The company plans to save up to $200 million in costs, allocate $160-$180 million for capital expenditure, and use up to $1.1 billion for debt retirement, preferred share redemption and share repurchases. Non-comparable sales headwinds are expected to be $225 million and a net square footage decline is likely to be up to 1% for the year.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.5% and 11.3%, respectively, from the fiscal 2023 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 61% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Steven Madden designs, sources, markets, and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
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Signet Q2 Earnings Top Estimates, Same-Store Sales Decline Y/Y
Signet Jewelers Limited (SIG - Free Report) posted second-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, both revenues and earnings declined year over year. Also, same-store sales fell 3.4% from the year-ago period. Same-store sales are being impacted by Digital Banners, resulting in a decline of approximately 150 basis points (bps).
In the second quarter of fiscal 2025, Signet focused on several strategic initiatives. The company emphasized increasing its merchandise margin and average transaction value (ATV) by introducing innovative and trendy products, leading to a 50% rise in new merchandise revenues.
Signet expanded its Fashion and Bridal categories while maintaining inventory discipline. It also saw continued growth in its services sector, particularly with extended service agreements. Engagement recovery gained traction, with units improving by approximately 400 basis points. Investments in marketing, e-commerce enhancements and store renovations were the key elements to drive growth heading into the holiday season.
This Zacks Rank #4 (Sell) player’s shares have lost 0.3% in the past three months compared with the industry’s 13% decline.
Signet Jewelers Limited Price, Consensus and EPS Surprise
Signet Jewelers Limited price-consensus-eps-surprise-chart | Signet Jewelers Limited Quote
More on Signet’s Q2 Results
Signet reported adjusted earnings of $1.25 per share, beating the Zacks Consensus Estimate of $1.13. The bottom line decreased 19.4% from $1.55 in the year-ago quarter.
This jewelry retailer generated total sales of $1,491 million, surpassing the consensus estimate of $1,490 million. However, the top line fell 7.6% year over year. The metric also declined 7.6% at constant currency.
Insight Into SIG’s Margins & Expenses
The gross profit in the fiscal second quarter amounted to $533.6 million, down 7.3% from $610.8 million in the year-ago quarter. The gross margin increased 10 bps year over year to 38% in the quarter under review.
This increase was driven by a 120-bps improvement in the merchandise margin due to a higher mix of Services and Fashion revenues, partially offset by increased fixed costs like store occupancy.
Selling, general and administrative (SG&A) expenses were $498.4 million, down 2.5% from $511.2 million in the prior-year quarter. Meanwhile, SG&A expenses, as a percentage of sales, stood at 33.4%, which rose 170 bps year over year. This change resulted from fixed cost deleverage.
SIG reported adjusted operating income of $68.6 million, down from $102.7 million in the year-ago quarter. As a rate of sales, the adjusted operating margin decreased 180 basis points to 4.6%.
Image Source: Zacks Investment Research
Update on Signet’s Segmental Performance
Sales in the North American segment fell 6.9% year over year to $1.4 billion. This decline was caused by a 1.6% year-over-year rise in the ATV on a lower number of transactions. Same-store sales tumbled 3.7% year over year.
Sales in the International segment decreased 15.2% year over year to $86.5 million due to a 13.4% reduction in ATV, influenced by the sale of prestige watch stores, coupled with fewer transactions. Same-store sales slipped 1.7% year over year. Sales fell 15.8% on a constant-currency basis.
The Zacks Consensus Estimate of net sales for the North American and International segments was pegged at $1.3 billion and $73 million, respectively, in the quarter under review.
Update on SIG's Stores
As of Aug. 3, 2024, the North American segment had 2,401 stores, a decrease from 2,411 in February 2024 due to 3 openings and 13 closures. The International segment had 267 stores, down from 287 after 20 closures and no openings. Overall, Signet had 2,668 stores, down from 2,698 following 3 openings and 33 closures.
SIG’s Financial Snapshot: Cash, Debt & Equity Overview
Signet ended the fiscal second quarter with cash and cash equivalents of $403.1 million, and inventories of $1.98 billion. Total shareholders’ equity was $1.92 billion at the end of the fiscal second quarter.
As of Aug. 3, 2024, it used net cash of $114.4 million in operating activities.
In the second quarter, it repurchased approximately 441,000 common shares at an average price of $90.35 per share, totaling $39.8 million. At the end of the second quarter, the company had $813.8 million remaining under its share repurchase authorization.
Signet’s FY25 Guidance
For the third quarter of fiscal 2025, the company projects total sales between $1.345 billion and $1.380 billion, with same-store sales between a decline of 1% and an increase of 1.5%. Adjusted operating income is forecast between $8 million and $25 million, while adjusted EBITDA is anticipated between $55 million and $72 million.
The gross margin is expected to expand modestly, while SG&A is likely to experience some deleveraging due to the shift of marketing spend into the third quarter ahead of the upcoming election.
For fiscal 2025, the company expects total sales of $6.66-$7.02 billion and same-store sales between a decline of 4.5% and an increase of 0.5%. Adjusted operating income is projected between $590 million and $675 million, with adjusted EBITDA between $780 million and $865 million. Adjusted diluted EPS is forecast at $9.90-$11.52.
The guidance assumes up to 5% growth in engagements, robust fashion sales and a modest improvement in digital trends. The company plans to save up to $200 million in costs, allocate $160-$180 million for capital expenditure, and use up to $1.1 billion for debt retirement, preferred share redemption and share repurchases. Non-comparable sales headwinds are expected to be $225 million and a net square footage decline is likely to be up to 1% for the year.
Stocks to Consider
Some better-ranked companies are Boot Barn Holdings, Inc. (BOOT - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.5% and 11.3%, respectively, from the fiscal 2023 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 61% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Steven Madden designs, sources, markets, and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.