Signet Surges After Surprise Sales Growth
August 30 2018 - 4:49PM
Dow Jones News
By Kimberly Chin
Shares of Signet Jewelers Ltd. surged 25% on Thursday after the
world's largest retailer of diamond jewelry reported positive
same-store sales growth for the first time in a year, fueled by
increased consumer confidence.
Same-store sales for the parent of Kay Jewelers and Zales rose
1.7% in the second quarter from the prior year. Analysts polled by
Consensus Metrix were expecting a 4.2% decline. Overall, revenue
rose 1.5% to $1.42 billion.
This surprise sales growth comes as retailers have seen
consumers, increasingly confident about their economic prospects,
spending more money on a range of items such as designer handbags
and apparel.
Rising demand in the U.S. market, supported by wage growth and
low unemployment, helped lift comparable sales at some of the
largest luxury brands, such as Tiffany & Co., LVMH Moët
Hennessy Louis Vuitton, and Kering SA, parent of Gucci, Yves Saint
Laurent and Balenciaga.
Chief Executive Virginia Drosos said that promotions and the
addition of new items helped prop up sales in North American for
the quarter.
For Signet, the positive growth comes as the retailer tries to
return to profitability in the midst of a three-year turnaround
plan. For instance, Signet sold its consumer-lending portfolio to
raise money and sharpen its focus on its core jewelry business.
In the second quarter, Signet reported a loss of $31.2 million,
or 56 cents a share, in the quarter, compared with a profit of
$85.2 million, or $1.34 a share, in the same period a year earlier.
The loss was driven by higher selling and administrative expenses
as well as costs related to restructuring and the outsourcing of
its credit operations.
On an adjusted basis, Signet reported a profit of 52 cents a
share. Analysts had expected 20 cents a share, according to a
Thomson Reuters poll.
Signet also announced Thursday Chief Financial Officer Michele
Santana is planning to leave at the end of the year to "pursue
other opportunities." Signet will look externally for candidates to
fill Ms. Santana's position.
Signet, along with Tiffany, has been pouring money into
revamping its stores and sales and marketing strategies to reduce
its dependence on shoppers walking into physical locations. As part
of its turnaround, Signet has also invested in improving its
e-commerce and omnichannel capabilities. E-commerce sales increased
83% to $150.3 million in the most recent quarter.
With Thursday's gains, Signet shares, recently trading at
$68.54, swung into positive trading territory for the year.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
August 30, 2018 16:34 ET (20:34 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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