Signet Jewelers put the sparkle back in its investors’ eyes.
Shares were up more than 35% at one point in early trading Thursday after the Akron-based national jewelry retailer posted stronger-than-expected fiscal 2020 figures and said it anticipates exceeding its earnings goals this year. The company also said it expects to reduce by half its merchandise exposure to China as a result of tariffs.
Even so, Signet reported it lost money in the quarter, while results adjusted for one-time measures showed a profit.
Signet said it lost $22.4 million, or 86 cents per share, on revenue of nearly $1.4 billion for the quarter ending Aug. 3; the loss includes a goodwill impairment charge of 91 cents per share. That compares to a loss of $58.1 million, or 58.1 cents per share, on revenue of $1.4 billion for the second quarter a year ago.
Adjusted earnings showed a profit of $53.1 million, or 51 cents per share, the company said.
Results beat analyst expectations.
Shares closed up $2.95, or 26.8%, to $13.97 on Thursday. Over the past 52 weeks, shares have ranged from a low of $10.40 to a high of $68.24.
“We continue to gain traction on our transformation initiatives and delivered second quarter results that exceeded our same store sales, non-GAAP operating profit, and non-GAAP earnings per share expectations,” Virginia Drosos, chief executive officer, said in a news release. “Our continuing cost control and disciplined inventory management also led to improved adjusted free cash flow generation in both the second quarter as well as year to date. We remain on track to deliver our full year non-GAAP financial guidance.”
Signet is the parent of Kay Jewelers, Jared, Zales, Piercing Pagoda, JamesAllen.com and other brands and has about 3,200 stores.
Signet’s jewelry merchandise is subject to tariffs that took effect Sept. 1, Drosos told analysts in a conference call.
“We have been successful in working with our vendors to move a significant amount of our China exposure to other countries. By fiscal 2020 year-end, we expect our merchandise spend exposure to China to be in the mid-teens on a percentage basis, roughly half of the exposure we discussed on our last call,” she said.
The company remains focused on delivering its Path to Brilliance transformation designed to drive sustainable growth and create value for shareholders, she said.
The company is encouraged by its growth in e-commerce sales, Drosos said. North American e-commerce sales were up 9.9% from a year ago, she said.
Sales at brick-and-mortar stores open at least a year dropped 1.5% from the second quarter a year ago.
Signet Jewelers raised its full-year adjusted earnings forecast to $2.91 to $3.23 a share. The company previously said it expected to have adjusted earnings of $2.88 to $3.17 a share. Non-adjusted earnings are expected to range from 87 cents to $1.33 a share.
Signet said it anticipates full year revenue of $6 billion to $6.03 billion, with sales at stores open at least a year down 1.5 to 2.5% from fiscal 2019.
Jim Mackinnon covers business. He can be reached at 330-996-3544 or email@example.com. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ