Signet's (SIG) Q3 Loss Narrower Than Expected, Sales Beat
Zacks Investment Research | Dec 05, 2019 09:23PM ET
Signet Jewelers Limited (NYSE:SIG) reported third-quarter fiscal 2020 results, wherein adjusted loss was narrower than the Zacks Consensus Estimate. Moreover, the quarter marked the eighth straight sales beat. Notably, the company raised its top and bottom-line guidance for fiscal 2020. These positives seemed to have boosted investors’ spirits, as is evident from the stock’s 7.5% gain during the trading session on Dec 5.
Fiscal Q3 in Detail
The company reported adjusted loss of 76 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of $1.07. Moreover, the figure was narrower than the year-ago quarter’s reported loss of $1.06.
This jewelry retailer generated total revenues of $1,187.7 million that surpassed the Zacks Consensus Estimate of $1,138 million. However, the top line dipped 0.3% year over year. On a constant-currency (cc) basis, revenues inched up 0.2%. Although robust same-store sales contributed to the top line to some extent, adverse foreign currency movements and store closures acted as deterrents.
The company’s same-store sales increased 2.1% year over year. E-commerce sales grew 11.4% from the prior-year quarter to $139.3 million. Markedly, e-commerce constituted 11.7% of total sales. Meanwhile, brick-and-mortar same-store sales inched up 0.9% from the year-ago quarter.
Adjusted gross profit fell 0.6% to $369.1 million, while adjusted gross margin remained flat with the prior-year figure of 31.1%. Cost savings related to transformation plan and increase in credit revenues offset lower merchandise margin.
Selling, general & administrative expenses were down 2.9% from the prior-year period to $398.4 million in the quarter, courtesy of reduced store staff expenses (owing to the closure of a few stores) and transformation cost savings. However, these were partly offset by higher advertising costs.
It posted adjusted operating loss of $29.3 million, narrower than a loss of $38.9 million reported in the year-ago quarter. The year-over-year improvement was driven by transformation cost savings.
Segment Discussion
Sales at the North America segment grew 0.6% on a reported basis (or 0.7% at cc) to $1,070.7 million. Same-store sales increased 2.9% from the year-ago period, owing to solid performance of Kay and Piercing Pagoda. Also, James Allen returned on growth track, recording double-digit sales improvement.
Further, same-store sales rose 2.8% in Zales, 3.8% in Kay, 12.4% in Piercing Pagoda and 15.8% in James Allen. Meanwhile, the metric declined 4.2% and 2.9% in Peoples and Jared, respectively.
Sales at the International segment declined 12.4% on a reported basis and 8.4% at cc to $106.4 million. Same-store sales at the segment dipped 5.2% from a year ago, with ATV and transaction declining 1.4% and 4.3%, respectively. Dismal same-store sales performance mainly stemmed from softness across all categories and a tough operating environment in the U.K.
Signet Jewelers Limited Price, Consensus and EPS Surprise
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