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Signet (SIG) Q3 Earnings & Revenues Beat, FY22 View Higher

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Signet Jewelers Limited (SIG - Free Report) reported stellar third-quarter fiscal 2022 results. Both the top and the bottom line beat the Zacks Consensus Estimate and improved year over year.

Signet’s e-commerce business performed impressively during the quarter. Consumers are responding positively to SIG’s refreshed merchandise assortment as well as the advanced capabilities to the Connected Commerce and fulfillment capabilities. SIG’s Inspiring Brilliance strategy is also well on track.

Over the past three months, shares of this presently Zacks Rank #1 (Strong Buy) player have gained 35.8% in the past six months, outperforming the industry’s rise of 12.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Q3 Details

Signet reported adjusted earnings of $1.43 per share that beat the Zacks Consensus Estimate of 67 cents. The bottom-line figure rose significantly from 11 cents earned in the year-ago quarter.

This jewelry retailer generated total sales of $1,537.8 million, surpassing the Zacks Consensus Estimate of $1,452 million. The top line also increased 18.3% year over year and 29.5% from the third-quarter fiscal 2020 actuals. Same-store sales rose 18.9% year over year and 37.2% from the third-quarter fiscal 2020 reading.

Signet Jewelers Limited Price, Consensus and EPS Surprise

Signet Jewelers Limited Price, Consensus and EPS Surprise

Signet Jewelers Limited price-consensus-eps-surprise-chart | Signet Jewelers Limited Quote

E-commerce sales jumped 14.4% from the prior-year quarter’s level to $273.1 million. Brick-and-mortar same-store sales grew 20.3% year over year.

A Sneak Peek Into Margins

Gross profit in the reported quarter amounted to $575.6 million, up from $436.5 million in the year-ago fiscal’s comparable quarter and $369.1 million in third-quarter fiscal 2020. Gross margin came in at 37.4%, which expanded 400 basis points (bps) year over year.

Selling, general & administrative expenses (SG&A) came in at $470.5 million, up from $389.3 million in the prior fiscal year’s comparable quarter. Signet reported an adjusted operating income of $105.2 million, significantly up from $46.8 million recorded in the year-ago fiscal’s comparable quarter and against an adjusted operating loss of $29.3 million.

Segment Discussion

Sales in the North America segment increased 17.9% on a reported basis to $1,394.2 million. Same-store sales jumped 19.8% from the year-ago quarter’s levels, buoyed by broad-based category strength. Average transaction value (ATV) rose 15.2%, while the number of transactions climbed 3.5%

The segment’s e-commerce sales grew 14.9%, while brick-and-mortar same-store sales jumped 21.5%.

Sales in the International segment rose 13.1% on a reported basis to $120.9 million. Same-store sales at the segment increased 8.8% year over year. ATV dipped 4%, while the number of transactions increased 12.8%. E-commerce sales improved 8.6%, while brick-and-mortar same-store sales rose 8.9%.

Financial Details

Signet ended the quarter with cash and cash equivalents of $1,516.9 million, accounts receivable, net of $19.3 million and inventories of $2,148.3 million. Long-term debt was $147 million at the end of the reported quarter, down from $1 billion million at the end of the year-earlier quarter. Total shareholders’ equity was $1,534.6 million at the end of the quarter.

For the 39-week period ended Oct 30, 2021, Signet generated net cash of $483.9 million from operating activities. It had adjusted free cash flow of $352.1 million.

During fiscal 2022 to date, Signet repurchased roughly 467,000 shares for $41.1 million. As of Oct 30, 2021, SIG had $183.9 million remaining under the share repurchase authorization.

As of Oct 30, 2021, Signet had 2,851 stores. SIG projects closing about 75 stores in fiscal 2022 while opening around 85.

Outlook

Signet raised expectations for fiscal 2022. For fiscal 2022, management expects total revenues of $7.41-$7.49 billion, up from $7.04-$7.19 billion predicted earlier. Signet now anticipates same-store sales in the range of 41-43%, up from the earlier view of 35-38%.

Adjusted operating income is anticipated in the range of $777-$814 million, suggesting a rise from the prior projection of $680-$735 million. Capital expenditures are likely to come in the $190-$200 million bracket.

For fourth-quarter fiscal 2022, management expects revenues of $2.40-$2.48 billion. Signet expects same-store sales in the band of 6-9%. Adjusted operating income is expected to be $280-$317 million.

Signet purchased Diamonds Direct, which is included in the fourth quarter and fiscal 2022 outlook from the date of acquisition on Nov 17, 2021. Management anticipates a shift of consumer discretionary spending from the jewelry category to experience-oriented categories in the fiscal fourth quarter.

Cost savings are likely to benefit SG&A and the gross margin. SIG continues focusing on mitigating the impacts of supply-chain disruptions stemming from the pandemic.

However, management is cautious about the rest of the fiscal year due to the uncertainties triggered by the pandemic and the Omicron variant.

More Key Picks

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Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 at present. The stock has jumped 69.2% in the past six months.

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Tractor Supply, a rural lifestyle retailer in the United States, flaunts a Zacks Rank of 1, currently. TSCO has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of TSCO have surged 32.6% in the past six months.

The Zacks Consensus Estimate for Tractor Supply’s current-year sales and EPS suggests growth of 19% and 23.9%, respectively, from the year-ago period’s corresponding readings. TSCO has an expected EPS growth rate of 9.6% for three-five years.

Target, a renowned omnichannel retailer, presently carries a Zacks Rank #2 (Buy). TGT has a trailing four-quarter earnings surprise of 19.7%, on average. The stock has rallied 22% in the past six months.

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