This is why Signet Jewelers is having its best day in more than 27 years

This is why Signet Jewelers is having its best day in more than 27 years

16 Jan    Finance News

Shares of Signet Jewelers Ltd. blasted off Thursday, toward their biggest one-day gain since the early-1990s, after a strong holiday performance helped flip the fourth-quarter sales outlook to growth from a decline.

The company, which retail store brands include Kay Jewelers, Zales and Jared, said total same-store sales for the nine-weeks ended Jan. 4 rose 1.6% above year-ago levels, as 13.5% growth in digital sales helped offset a 0.2% decline in brick-and-mortar sales.

Among the self-proclaimed world’s largest diamond jewelry retailer’s SIG, +43.14%  store brands, holiday-period same-store sales rose 0.2% for Kay, increased 5.4% for Zales, fell 3.5% for Jared, grew 6.9% for Piercing Pagoda, jumped 26.9% for James Allen and were up 4.5% for Peoples.

As a result, Signet said it now expects same-store sales for the fiscal fourth quarter, which ends in January, to be up 0.1%, compared with the guidance range provided on Dec. 5 of down 4.0% to 2.0%. Net sales are now expected to be $2.12 billion, above previous guidance of $2.03 billion to $2.07 billion.

The stock rocketed 40.7% on heavy volume in midday trading Thursday. That would be the biggest one-day percentage gain since it rose 42.9% on Oct. 13, 1992, according to FactSet data. Trading volume swelled to 15.7 million shares, compared with the full-day average of about 2.5 million shares.

Signet also raised its guidance for net earnings per share to $3.42 to $3.56 from $2.99 to $3.26, and for adjusted EPS to $3.44 to $3.52 of from $3.01 to $3.16. The FactSet consensus for adjusted EPS was $3.26.

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“Product newness, investments in our digital capabilities, and more targeted marketing campaigns drove both e-commerce and brick and mortar growth in North America,” said Chief Executive Virginia Drosos.

In North America, same-store sales grew 2.0%, as growth in bridal and fashion offset declines in beads and watches. E-Commerce sales rose 13.3% and brick-and-mortar same-store sales increased 0.4%.

Signet’s surprisingly strong performance comes after a disappointing holiday-period sales reports from a number of retailers, including Target Corp. TGT, -0.81%  , GameStop Corp. GME, -0.76%  , Victoria’s Secret-parent L Brands Inc. LB, +1.95%  , Macy’s Inc. M, +0.63%  and Kohl’s Corp. KSS, -0.11%  

Signet’s stock, which is headed for the highest close in a year, had now nearly tripled (up 175%) since it closed at a 10-year low of $11.01 on Sept. 4, 2019, which was a far cry from the Oct. 30, 2015 record close of $150.94. Read more about Signet’s fiscal third-quarter results.

After the stock lost 31.6% in 2019, to extend its record yearly losing streak to five years, it started 2020 with a 12.9% plunge, after Wells Fargo analyst Ike Boruchow turned bearish, citing expectations of a continued decline in consumer interest.

It has now run up 39.1% year to date, while the SPDR S&P Retail exchange-traded fund XRT, +1.26%  has slipped 0.5% and the S&P 500 index SPX, +0.57%  has edged up 2.3%.

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