Signet Jewelers Limited (SIG Quick QuoteSIG - Free Report) posted third-quarter fiscal 2025 results, wherein both top and bottom lines missed the Zacks Consensus Estimate. Also, revenues declined and earnings remained flat year over year. Same-store sales fell 0.7% from the year-ago period. Same-store sales have been impacted by Digital Banners, resulting in a decline of approximately 120 basis points (bps).

SIG outlined several strategic initiatives during its fiscal third quarter. The company is focusing on driving sales momentum with a comprehensive go-to-market strategy to boost same-store sales in the fiscal fourth quarter, particularly through increased penetration of new merchandise in core banners. Newness in fashion merchandise, including more than 30% growth in lab-created diamond fashion sales, is a key focus area, enhancing average transaction value (ATV) and merchandise margin. 

Signet is also prioritizing digital integration by addressing API and platform challenges in its James Allen and Blue Nile banners while strengthening leadership with a new digital banner president. Moreover, the company is streamlining inventory and working to recover engagement in bridal merchandise while balancing promotional strategies to stay competitive during the holiday season. This Zacks Rank #3 (Hold) player’s shares have gained 14.7% in the past three months compared with the industry’s 26.8% growth.

More on Signet’s Q3 Results

Signet reported adjusted earnings of 24 cents per share, missing the Zacks Consensus Estimate of 29 cents. 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

This jewelry retailer generated total sales of $1,349.4 million, missing the consensus estimate of $1,364 million. Also, the top line fell 3.1% year over year. The metric also declined 3.4% at constant currency.

Insight Into SIG’s Margins & Expenses

The gross profit in the fiscal third quarter amounted to $485.3 million, down 3.2% from $501.3 million in the year-ago quarter. The gross margin remained flat year over year to 36% in the quarter under review. 

Merchandise margin remained unchanged in the fiscal third quarter, following a 250 bps increase in the same period last year.

Adjusted selling, general and administrative (SG&A) expenses were $469 million, down $8 million from the prior-year quarter. Meanwhile, adjusted SG&A expenses, as a percentage of sales, were 35%, which deleveraged 50 bps year over year. This was primarily due to slightly higher marketing expenses to accelerate spending ahead of the election, along with approximately $2 million in leadership transition costs.

SIG reported adjusted operating income of $16.2 million, down from $23.9 million in the year-ago quarter. As a rate of sales, the adjusted operating margin decreased 50 bps to 1.2%.

Update on Signet’s Segmental Performance

Sales in the North American segment fell 2.3% year over year to $1.26 billion, which came slightly below the Zacks Consensus Estimate of $1.29 billion. This decline reflects a flat year-over-year ATV and a reduced number of transactions. Same-store sales tumbled 0.8% year over year. 

Sales in the International segment decreased 11.4% year over year to $83.3 million, surpassing the consensus estimate of $79 million. This was due to a 13.4% drop in total ATV, primarily due to the previously announced sale of prestige watch locations, along with a lower number of transactions. Same-store sales slipped 1.6% year over year. Sales fell 15.5% on a constant-currency basis.

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Update on SIG's Stores

As of Nov. 2, 2024, the North American segment had 2,389 stores, a decrease from 2,411 in February 2024 due to eight openings and 30 closures. The International segment had 266 stores, down from 287 after 21 closures and no openings. Overall, Signet had 2,655 stores, down from 2,698 following eight openings and 51 closures.

SIG’s Financial Snapshot: Cash, Debt & Equity Overview

Signet ended the fiscal third quarter with cash and cash equivalents of $157.7 million, and inventories of $2.14 billion. Total shareholders’ equity was $1.80 billion at the end of the fiscal third quarter.

As of Nov. 2, 2024, the company used net cash of $189.8 million in operating activities. 

In the fiscal third quarter, it repurchased approximately 743,000 common shares at an average price of $89.54 per share, totaling $66.5 million. At the end of the third quarter, the company had $747.3 million remaining under its share repurchase authorization.

Signet’s Q4 Guidance

For the fourth quarter of fiscal 2025, the company projects total sales between $2.38 billion and $2.46 billion, with same-store sales between flat to an increase of 3%, which includes an approximate one-point drag from the underperformance of digital banners. 

Engagement units are projected to grow in the low to mid-single digits, suggesting stronger customer engagement or increased transaction volumes. Fashion sales are anticipated to rise modestly in the fiscal fourth quarter. 

Adjusted operating income is forecasted between $397 million and $427 million, while adjusted EBITDA is anticipated between $441 million and $471 million. The gross margin rate is projected to increase this quarter, accompanied by a slight rise in the SG&A rate.

What to Expect From Signet in Fiscal 2025?

For Fiscal 2025, total sales are expected in the range of $6.74-$6.81 billion. Same-store sales are projected to decline between 3% and 2%. Adjusted operating income is forecasted between $540 million and $570 million, while adjusted EBITDA is anticipated in the band of $715-$745 million. Adjusted diluted EPS is expected between $9.62 and $10.08.

The company’s fiscal 2025 guidance is based on the following assumptions that fashion same-store sales are expected to decline by low single digits or be approximately flat. Engagement units in North America are expected to remain flat, excluding Digital banners (James Allen and Blue Nile), but will decline 5% to low-single digits when those are included. 

Digital banners are expected to impact sales by approximately 1.5%. The company anticipates achieving cost savings initiatives between $190 million and $200 million, with capital expenditures expected between $160 million and $170 million. The company also expects a net square footage decline of approximately 1% for the year.

Stocks to Consider

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Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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