Signet Jewelers Limited (SIG) on Q3 2021 Results - Earnings Call Transcript
Operator: Good day, and welcome to the Signet Jewelers Third Quarter Fiscal 2021 Earnings Conference Call. All participants will be in listen-only mode. . After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Vinnie Sinisi, SVP, Investor Relations and Treasury. Please go ahead. Vinnie Sinisi : Great. Thanks so much, Elissa, and good morning, everybody. Welcome to our third quarter earnings conference call. On the call today are Signet's CEO, Gina Drosos; and CFO, Joan Hilson. During today's presentation, we'll make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. We urge you to read our risk factors, cautionary language and other disclosure in our annual report on Form 10-K, quarterly reports on 10-Q and current reports on 8-Ks. Except as required by law, we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events. Gina Drosos : Thank you, Vinnie. Good morning, everyone. We're pleased to report our third quarter results, which I'll share in a moment. I also want to use this call to take a longer-term view of where we're headed and to share my confidence that our Path to Brilliance strategies are working and are positioning Signet for long-term growth. Let's begin with a look at the Q3 results. Total sales increased 9.5% and same-store sales increased 15.1% versus last year as our stores reopened, and we made intentional efforts to capture both pent-up demand and early holiday sales. eCommerce sales increased 71.4% compared to last year through continued execution of our OmniChannel focus as part of the Path to Brilliance. Brick-and-mortar same-store sales grew 6.8%, with over 90% of our stores opened this quarter. This demonstrates that our eCommerce growth isn’t coming at the expense of our stores and also demonstrates the progress we're making toward our goal of becoming the strongest OmniChannel player in our industry. We generated $606.7 million in cash flow from operating activities year-to-date by focusing on working capital efficiencies and cost consciousness. Non-GAAP EPS was $0.11, reflecting the combination of our accomplishments on both the top-line and in our expense categories. These results were driven by several factors. First, the passion and performance of our Signet team; second, continued strong execution of our Path to Brilliance strategy, building on the foundation we've established and adding a number of significant digital product and marketing innovations this year; third, targeted efforts, including marketing and clienteling to capture pent-up demand following store reopenings; and fourth, intentional media and promotional efforts that we put in place to capture early holiday shopping. Our Signet team brought remarkable creativity, capability, agility and passion to every aspect of our performance. Pressure can derail some organizations, but it has focused the Signet team and is bringing out the best in us. We have a saying at Signet that I love, pressure makes diamonds. And that's been evident throughout the entire Path to Brilliance journey, and it's been especially palpable over the past 9 months. I am very proud of our team who are at the heart of Signet, and I'm honored to work alongside them every single day. We are now an even stronger and more united team and company. Joan Hilson : Thank you, Gina. Hello, everyone. Q3 performance reflects the traction of our Path to Brilliance strategy, delivering top-line growth, expense control, improvements in working capital that drove strong cash flow and a return to Q3 profitability. Total sales in the third quarter grew 9.5% over last year and same-store sales grew 15.1%. This growth reflects our company's evolution and ability to meet shifts in customer shopping trends this year. I’d also note that we believe the top-line benefited from time shifts and we captured pent-up demand from the second quarter as well as intentionally drove early holiday shopping through marketing and promotion, which is expected to impact the fourth quarter. Before continuing our walk through the P&L, I'd like to color in some of Gina's comments. The 71.4% growth in third quarter eCommerce sales represents 18.4% of our total sales. We were able to maintain that level of growth with stores mostly open through investments like visual search capabilities, search-as-you-type functionality that returns more intuitive results, new customer routing technology that is getting customers assistance more effectively, as well as the launch of messaging that allows our jewelry consultants to message directly with customers' phones. The digital achievements are enhanced by the strides we're making in optimizing our physical footprint. The positive brick-and-mortar same-store sales reflects our continued shift of our store base to off-mall locations. Though approximately two-thirds of our fleet is housed in traditional malls, of the 380 store closures planned for this fiscal year, we have closed 316 by the end of the third quarter. The large majority of closings continue to be in traditional mall locations. Supportive of our continued portfolio shift to off-mall, we have seen that traditional mall foot traffic is lagging to our other formats, especially in this macro environment. As we've previously discussed, our greenfield analysis from earlier this year has informed us on how to best represent our banners and formats in a given trade area, helping to drive OmniChannel growth. Continuing along the P&L, we delivered non-GAAP third quarter gross margin of approximately $437 million or 33.6% of sales. This is 250 basis points above last year, largely due to higher sales volume and lower store occupancy costs. SG&A was approximately $390 million, down about $9 million to last year. The decline was driven by lower labor and operating costs that was partially offset by increased advertising investments made to communicate the extended holiday selling period. Please note that store labor costs will sequentially increase in the fourth quarter as we have implemented extended holiday shopping hours and over 2,000 concierge stations. Non-GAAP operating profit was $46.8 million, up over $76 million to last year and excludes $7.1 million in asset impairment and restructuring charges related to the Path to Brilliance transformation plan. Third quarter non-GAAP EPS was $0.11. This compares to a prior year non-GAAP EPS loss of $0.76. Turning now to the balance sheet. Continued use of strategic clearance this quarter improved our product life cycle management and contributed to a reduction in our inventory of more than $345 million to this time last year. While a portion of that reduction is due to the timing of inventory receipts, it also demonstrates our continued focus on managing inventory levels ahead of holiday. Combining our inventory management with extended payment terms within our network of valued vendors has improved our working capital. Those improvements, along with a tax refund of $164 million, contributed to more than $606 million of cash from operating activities this year, supporting reinvestment for long-term share gains. Capital expenditures remain on track to be approximately $85 million. Fluctuation in inventory levels, combined with the increase in our cash position, allowed us to pay down approximately $300 million of our revolver this quarter as well as an additional $190 million subsequent to quarter end. Cash and equivalents ended the quarter at $1.3 billion, enabling us to maintain flexibility and remain prudently cautious in this current environment. Now regarding our cost savings efforts, we remain on track to deliver the $285 million of cumulative cost savings under Path to Brilliance by fiscal year-end. These efforts are largely derived from efficiencies in labor, store operating and inventory-related costs and direct sourcing. I'd like to quickly update you on our financial and jewelry services. As of the end of the third quarter, accounts that we've originated were $39.6 million, net of allowances and continue to perform in line with expectations. We continue to enhance our payment options to include installment loans to Apple Pay, Google Pay as well as the ability to fully apply and buy online across all payment products. We note payment penetration remains lower to last year at 42.6%, though improved over last quarter by 240 basis points. Our goal is to offer our customers a wide range of payment alternatives to meet their needs. Importantly, in October, ahead of holiday, we made substantially all warranty service products available to our customers online. Looking to the fourth quarter, our preliminary same-store sales through November 30th were up approximately 3% quarter-to-date versus last year. For the Thanksgiving weekend through Cyber Monday, same-store sales were down low single-digits, reflecting weak retail store traffic trends, somewhat offset by higher conversion rates, migration to digital platform and higher transaction value. We have taken additional steps ahead of the shopping season to help manage high-traffic days, including earlier and longer promotional periods, additional labor in the form of longer store hours and concierge locations as well as expanded fulfillment capabilities to meet customer demand throughout the holiday. That said, since our strongest holiday weeks have historically been the 2 weeks prior to Christmas, we believe same-store sales could be negatively impacted in December as a result of weaker retail store traffic trends, COVID social distancing capacity constraints and store closures due to virus trends. As such, we're not providing financial guidance at this time and believe COVID-related issues will have a more significant negative effect in December versus November. Before we open the call for Q&A, I'd like to take a moment to thank the Signet team. This year has challenged each of us, and our team has met that challenge to drive this quarter's results above our expectations. I have confidence that our team will continue to exhibit resiliency and agility into the future. We wish all of our team members, customers and business partners, a safe and healthy holiday season. And now, I'll turn the call over to the operator to begin the Q&A session. Operator: The first question today comes from Lorraine Hutchinson of Bank of America. Lorraine Hutchinson : I was just hoping to get a little bit more detail on the third quarter comp, maybe a breakout how bridal did versus fashion? Gina Drosos : Hi, Lorraine. Thanks for the question. We saw double-digit growth in both our bridal and our fashion portfolio. So really strength across the board. Lorraine Hutchinson : And were there any brands or categories that you tested in 3Q that you're particularly excited about for the holiday season? Gina Drosos: I would say, yes, a couple of areas. We continue to see some of the best performance on big brands, including Neil Lane, LeVian, Vera Wang. We now have online customization options for several of those, which are doing quite well. And our new launches, the -- I mentioned in my remarks, the Pnina Tornai line at Jared; Royal Asscher at Jared is doing really well. Everything You Are is a great sentimental gifting opportunity that we have across Kay and Zales. We just are -- we're very thankful to our vendor partners for working with us early, to achieve, I think, the best level of newness and optimized core assortment that we've had at Signet. So they really did a great job in a tough time managing all the social distancing and everything to get us great newness into our stores and online. Lorraine Hutchinson : And then last one for me. There's been a lot of talk about very crowded shipping channels over holiday. How are you thinking about capacity constraints? What's your cut-off date for Christmas? And do you think you can process the volume that you need to this holiday season? Gina Drosos: So a couple of things on that. One, that's something that we've been anticipating. So we've worked ahead on it. We took some of our existing internal distribution network and have made it external-facing. So we now have 5 times the shipping capacity for eCom orders this year versus last holiday season. So that's something we started working on end of last spring and have been able to bring that to life. And given our strong eCommerce numbers, it's already paying off, but I think that will especially be true in December. The second thing that we're doing is keeping our teams safe. So our protocols and our distribution center are very strict. And so we're working hard to make sure we don't have any disruptions on that front. We do expect that there will be high demand across the industry, so not just Signet, but across the industry as we get closer to Christmas. And so we've been working with our key partner, , to make sure that we can have an allocation of shipping options that are available as late as possible in the season. And then when that cuts off, we have curbside service, buy online pick up in-store, concierges who are helping to direct traffic, especially at our higher traffic locations and fulfill those orders really quickly. So all of those are kind of interventions that we've put in place, anticipating just what you said, which is some traffic in the online shipping network. Joan Hilson: The only thing I would add to that is the pull forwards that we've done in our promotions and marketing to try and smooth out some of the capacity issues that we would anticipate potentially occurring closer into holiday. So our intentional efforts towards marketing, earlier holiday promotions and so forth were -- are all direct -- excuse me, directed towards mitigating some of that help that traffic. Operator: The next question comes from Paul Lejuez of Citi. Tracy Kogan : This is Tracy filling in for Paul. I had a couple of questions. The first is, I was wondering if you could quantify the change in merchandise margin in the quarter and maybe give us a sense of promotional levels? And then secondly, is there any way to give us a sense of how much of your comp this quarter maybe was a pull forward of demand? Or how your marketing dollars shifted around between quarters? Any color you can give there would help. Gina Drosos: Okay. Thank you. The first question on merchandise margin, our merchandise margin was down somewhat in the quarter, and that's a reflection of the pull forward of the marketing efforts and promotional efforts to try to smooth out those high-traffic days as we lead into the holidays. So that's -- and it really included, as we've said in the past, strategic use of clearance, promotions on sell down inventory earlier than moving to clearance, which is also helpful in terms of just managing our overall inventory levels. So that's the color on merch margin. And the -- and then the overall marketing efforts on the pull forward, there's no perfect formula for what the pent-up demand was from the second quarter into the third quarter. We've taken a view that we believe a 20% of what we -- of the second quarter at a market level based on some research has pushed into the third quarter. And we believe that is very much directed at bridal as we've seen warranty improve as well related to that product in the third quarter. So there's a little bit of dimension there. But as I said, there's no perfect formula. And then the other thought that I would leave you with is that as we pull forward promotions into the third quarter, we believe that we were able to capture holiday demand and that we -- the marketing investment that we put into the third quarter, it did not limit the marketing investment in the fourth quarter. So we've been able to remain very consistent in our approach to our marketing efforts to continue to drive business in the fourth quarter. Operator: . The next question comes from Ike Boruchow of Wells Fargo. Ike Boruchow: So I'll just follow-up to the pent-up demand type of question. I guess, just on the 15 comp, outside of the pull forward of marketing and promotion, is there anything else you could cite or look to that would suggest a pull forward? And again, I don't know, but potentially a backlog of maybe repairs that were waiting while stores were closed, that you got to fulfill. Is there anything else there to kind of suggest the transition from an up 15 to the low single in November and the slightly negative over Black Friday would be helpful? Gina Drosos: Really, I think it's very much the promotional efforts that we’ve put in place as we -- and the new product that we've been able to land working with our vendors into the third quarter, we were able to hold on Mother's Day for the second quarter. And we were able to land that newness in the third quarter. So I would lean into the product offering and the core product that is fresh and we're able to turn quicker with all of our inventory management. And then I would also say that ship from store is another opportunity that we saw launch later in the quarter, enabling us to really leverage that opportunity earlier in the year, and that tends to -- when it first goes out, it tends to have a bit of a push early and then kind tends to even out as the year progresses. So I would say those are -- those would be the additional factors I might mention. Ike Boruchow: Got it. And then a follow-up on the gross margin line. You gave us a lot of helpful detail on quarter-to-date in the Black Friday week. Any commentary on the promotional environment over that selling period? Just kind of curious how pricing has kind of acted in November and over the holiday weekend? And then Joan, last question, just on gross margin for Q3. I think you mentioned some occupancy savings, which kind of helped you expand the gross margin. Is there anything more to that? Is that abatement? Is that one-time in some way? Just trying to understand how to flow through the occupancy benefits from 3Q as we think about modeling 4Q and beyond? Joan Hilson: No. Sure, Ike. So with respect to the price promotion over the holiday weekend, we believe we were very competitive in our positioning. We had a wide range of value offers to include the higher end products, the new brands that Gina mentioned were also very well received and got strong response from our customers. So I would say that in the world of promotion over Thanksgiving weekend, we were very competitive. And we expect the promotional environment to continue and believe we're positioned very well to manage that through the balance of the holiday selling. And then with the store occupancy costs, the rent is really about negotiation. And as we renew our leases, our team, our real estate team has done a wonderful job working in conjunction with our real estate developers and business partners to manage our costs and look forward to make sure that we are working towards arrangements that are very much in line with market and the current environment. So we're pleased with that. I would just note for you, Ike, that when you think of the leverage that comes off of a 15 comp, that's also something to keep in mind. Operator: The next question comes from Dana Telsey of Telsey Advisory. Dana Telsey : Congratulations on the progress. As you think about the different banners, Gina, any commentary on performance by banner and how those performed? And then Joan, as you think about the gross margin and also on the SG&A line, as you move through to the fourth quarter and into 2021, what levers of expenses, is there continued opportunities for reduction, and where can we continue to see some merchandise margin improvement going forward? Gina Drosos: Hi, Dana, thanks so much. We don't give specific banner comp performance. But I will say a couple of things about our banner portfolio. So based on our assessment of the market of purchase occasions, demographics of jewelry customers, psychographics, we have now begun to really tease apart our banner stand for. And as we focus Zales, for example, on a more style-oriented customer, both in the bridal category and in self purchase, we're seeing some real strength on Vera Wang and our fashion lines. On Kay, as we've targeted that more toward a sentimental gifter. We see strengths in bridal and in romantic gifting. Jared, we've been tearing up, and we're seeing strength at higher price points. And then Piercing Pagoda is typically our lowest average transaction value brand, and we've seen strength in gold, especially gold chains and gold earrings in that banner. The other thing I'll say is that we've been bringing significant new capability to all of our banners in eCommerce. And so we're seeing digital strength across all the banners. Joan Hilson: Dana, with respect to your question on SG&A cost-outs and margin expansion, we'll get the benefit of those things that we put in place this year that have a wrap around into '21. But the future opportunities really relate to the many investments that Gina mentioned in her script, which is basically the flexible fulfillment, our new policies that we have around merchandise, trade-ins, et cetera, and just the better management and that the teams have done a tremendous job of bringing our inventory levels down, should certainly be a positive for us. We are also working towards really understanding our inventory across all banners and leveraging back-office our size and the commonality of some of the products to really help improve our core in terms of costing. So -- and our vendors have been very helpful in working through that with us. And so we look forward to continued discussions with them. So those are just a few of the examples that I would give you on potential opportunities for the future. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Gina Drosos: Thank you all for your engagement on our call today. As we conclude, I just want to reiterate my profound appreciation for our Signet team for their passion, performance and commitment to our purpose and our customers. The acceleration we've discussed today is a direct result of their dedication and brilliant execution of our Path to Brilliance strategy. And to everyone listening, we wish you and your families a happy and healthy holiday season. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.SIG Ratings Summary
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Signet Jewelers Limited (NYSE:SIG) Surpasses Q1 Fiscal 2026 Earnings Estimates
- Signet Jewelers Limited (NYSE:SIG) reported a 16.83% earnings surprise with an EPS of $1.18, beating the estimated $1.01.
- The company's revenue for the quarter was $1.54 billion, exceeding estimates and showing a year-over-year increase.
- Signet's strategic efforts led to positive same-store sales growth and sequential growth across its three largest brands—Kay, Zales, and Jared.
Signet Jewelers Limited (NYSE:SIG), the world's largest retailer of diamond jewelry, operates in the Zacks Retail - Jewelry industry and has consistently demonstrated strong financial performance. On June 3, 2025, SIG reported its first-quarter earnings for Fiscal 2026, showcasing impressive results.
SIG reported earnings per share (EPS) of $1.18, surpassing the estimated $1.01, marking a 16.83% earnings surprise. This is an improvement from the $1.11 EPS reported in the same quarter last year. The company has a history of exceeding expectations, as seen in the previous quarter with an EPS of $6.62 against an anticipated $6.39, resulting in a 3.60% surprise.
The company's revenue for the quarter was approximately $1.54 billion, exceeding the estimated $1.52 billion by 1.69%. This is a slight increase from the $1.51 billion reported a year ago. Over the past four quarters, Signet has consistently outperformed consensus EPS and revenue estimates three times each, highlighting its strong financial performance.
Signet's positive same-store sales growth each month of the quarter, continuing into May, reflects its strategic efforts to enhance offerings at key price points and evolve its product assortment. The company's three largest brands—Kay, Zales, and Jared—experienced sequential growth, contributing to the overall revenue increase.
Financially, Signet has a price-to-earnings (P/E) ratio of approximately 52.21, indicating investor confidence. The price-to-sales ratio is about 0.45, and the enterprise value to sales ratio is approximately 0.54, reflecting the company's valuation in relation to its sales. With a debt-to-equity ratio of around 0.64 and a current ratio of approximately 1.48, Signet maintains a relatively healthy liquidity position.
Signet Jewelers Lifts Forecast After Earnings Beat, Shares Jump 11%
Signet Jewelers (NYSE:SIG) saw its stock spike over 11% intra-day today after delivering a better-than-expected first-quarter profit and raising its full-year outlook for fiscal 2026.
The jewelry retailer posted adjusted earnings of $1.18 per share for the quarter, beating the $1.03 consensus. While quarterly revenue of $1.5 billion came in just shy of expectations, it still marked a 2% increase year-over-year, supported by a 2.5% rise in same-store sales.
Buoyed by the solid start to the fiscal year, Signet raised its full-year adjusted earnings guidance to between $7.70 and $9.38 per share, up from its prior $7.31–$9.10 range. The revised outlook now sits above the Street’s $8.35 estimate. The company also slightly increased the bottom end of its full-year revenue forecast to $6.57–$6.80 billion.
Looking ahead to Q2, Signet projects revenue between $1.47 billion and $1.51 billion, with comparable sales expected to range from a 1.5% decline to 1% growth.
Signet Jewelers Shares Plunge 10% on Lowered Outlook
Signet Jewelers (NYSE:SIG) shares dropped more than 10% intra-day today after the company cut its guidance for the full-year profit and revenues.
The company reported Q1 adjusted EPS of $1.78 and revenue of $1.67 billion, compared to the Street estimates of $1.44 and $1.71 billion, respectively. Same-store sales fell 13.9% year-over-year.
For Q2, management expects revenue in the range of $1.53-1.58 billion, below the Street's estimate the $1.75 billion, For the full year, the company sees EPS at $9.79 and revenue at $7.2 billion from the prior estimates of $11.33 and $7.755 billion, respectively. Street estimates stand at $11.11 for EPS and $7.73 billion for revenues.
Signet Jewelers Shares Plunge 10% on Lowered Outlook
Signet Jewelers (NYSE:SIG) shares dropped more than 10% intra-day today after the company cut its guidance for the full-year profit and revenues.
The company reported Q1 adjusted EPS of $1.78 and revenue of $1.67 billion, compared to the Street estimates of $1.44 and $1.71 billion, respectively. Same-store sales fell 13.9% year-over-year.
For Q2, management expects revenue in the range of $1.53-1.58 billion, below the Street's estimate the $1.75 billion, For the full year, the company sees EPS at $9.79 and revenue at $7.2 billion from the prior estimates of $11.33 and $7.755 billion, respectively. Street estimates stand at $11.11 for EPS and $7.73 billion for revenues.
