Shares of Signet Jewelers Limited (NYSE:SIG) sparkled Tuesday after the company posted fiscal third-quarter results that beat guidance and raised its full-year forecasts.
The owner of stores including Kay, Zales and Jared attributed a 2.9% increase in sales to $1.6 billion for the 13 weeks ended October 29 to government benefit programs and the company’s strategic transformation including marketing initiatives.
While non-GAAP operating income of $57.9 million was down from a historic peak of $105 million a year earlier, it was a big turnaround from the $29.3 million loss reported in Q3 2020. Non-GAAP diluted earnings per share came in a 74c, more than double the consensus estimate.
"Our strong third quarter results exceeded guidance and evidence why we believe Signet is uniquely positioned to deliver consistent market share growth and value creation," CEO Virginia Drosos said in a statement.
"Our financial strength and flexible operating model are enabling continued strategic investments that are widening our competitive advantages."
Signet reported cash and cash equivalents, at quarter end, of $327 million, down approximately $1.2 billion from a year earlier, reflecting share repurchases and inventory in-stock replenishment, as well as the acquisition of Diamonds Direct and Blue Nile.
Younger, more affluent customers
“We have acquired 22.5 million new customers over the past five years, driving revenue and market share growth, and these customers are younger, more affluent and highly diverse with meaningful lifetime purchasing power,” Drosos continued.
“Our team's culture of innovation, agility and rigorous execution continue to drive advantage."
The company said it was raising its full-year guidance with confidence in the sustainability of an annual double-digit non-GAAP operating margin, reflecting current business trends and the inclusion of Blue Nile, the online retailer of engagement rings and fine jewelry it agreed to buy in August.
"We are entering this Holiday season with the healthiest and most consumer-inspired inventory in our history - down 2% despite tiering up our Accessible Luxury offering and with clearance at the lowest levels since our transformation began, excluding acquisitions,” chief financial and strategy officer Joan Hilson added.
“Today, nearly all of our inventory is immediately available to customers whenever, wherever and however they choose to browse, shop and buy with us which is driving inventory turns nearly double pre-transformation levels.”
Signet’s shares were 19% higher in early afternoon trading on Tuesday.
Contact the author at stephen.gunnion@proactiveinvestors.com