Signet Jewelers' stock dives after weak outlook, as marriage engagements drop

By Tomi Kilgore

Jewelry retailer sees U.S. engagements down in the low- to mid-single-digit percentage range in Q1, but up 5% to 10% for the year

Shares of Signet Jewelers Ltd. were suffering their worst day in nearly two years after the seller of diamond jewlery warned of a surprise same-store sales decline in the current quarter, as marriage engagements dropped off to start the year.

The parent of Kay Jewelers, Zales and Jared retail store chains, as well as online diamond-seller Blue Nile, also reported fiscal fourth-quarter sales that missed expectations, but profit that beat and boosted its dividend and share-buyback program.

The stock (SIG) tumbled 11.6% toward a three-month low in morning trading. It was on track to suffer the biggest one-day decline since it sank 12% on Sept. 1, 2022.

For the current quarter, which runs through April, the company expects total sales of $1.47 billion to $1.53 billion, below the current FactSet consensus of $1.61 billion.

Same-store sales, or sales from stores open at least a year, are projected to be down between 11% and 7% from the same period a year ago, compared with the FactSet consensus of a 0.7% increase.

The company said the outlook reflects its estimate that U.S. engagements for the quarter will be down in the low- to mid-single digits percentage range, as a drop off in January and February was followed by "notable improvement" since mid-February.

"As we look to fiscal 2025, we are expecting sequential same-store sales improvement over the year as engagements gradually recover," said Chief Executive Virginia Drosos.

Don't miss: Signet Jewelers has a pretty good idea when you'll get engaged.

Full-year same-store sales are expected to be down 4.5% to up 0.5% for the year, compared with the FactSet consensus for 2.6% growth, to reflect the beginning of the three-year engagement recovery that "gains velocity" as the year progresses.

"We believe engagements in the U.S. should increase this year between 5% and 10%," Drosos said, according to a FactSet transcript of the post-earnings call with analysts.

For the quarter to Feb. 3, the company reported net income that more than doubled to $617.6 million, or $11.75 a share, from $268.7 million, or $5.02 a share, in the year-ago period.

Excluding nonrecurring items, adjusted earnings per share of $6.73 beat the FactSet consensus of $6.37.

Sales fell 6.3% to $2.50 billion, below the FactSet consensus of $2.55 billion, to reflect declines in the number of transactions and total average value of each transaction.

Same-store sales sank 9.6%, compared with Wall Street expectations of an 8.5% decline.

Separately, Signet raised its quarterly dividend by 26%, to 29 cents a share from 23 cents a share. At current stock prices, the new annual dividend rate implies a dividend yield of 1.28%, which compares with the yield for the SPDR S&P Retail ETF XRT of 1.25% and the implied yield for the S&P 500 index SPX of 1.39%.

The company also increased its share repurchase program by $200 million, leaving a total authorization to buy back up to $850 million worth of common stock. That represents about 21% of the company's current market capitalization of $4.04 billion.

And, the company announced an initiative to cut costs by $350 million over the next three years, with cost savings of $150 million to $180 million expected this year.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

03-20-24 1116ET

Copyright (c) 2024 Dow Jones & Company, Inc.