Back to top

Image: Shutterstock

Signet (SIG) Q4 Earnings Beat Estimates, Sales Improve Y/Y

Read MoreHide Full Article

Signet Jewelers Limited (SIG - Free Report) reported stellar fourth-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 advanced capabilities to the Connected Commerce and fulfillment capabilities. SIG’s Inspiring Brilliance strategy is also on track.

Over the past three months, shares of this presently Zacks Rank #1 (Strong Buy) player have gained 30.9%, outperforming the industry’s rise of 5.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Q4 Details

Signet reported adjusted earnings of $5.01 per share that beat the Zacks Consensus Estimate of $4.91. The bottom line rose 20.7% from the year-ago quarter and 36.5% from fourth-quarter fiscal 2020.

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

This jewelry retailer generated total sales of $2,811.3 million, surpassing the Zacks Consensus Estimate of $2,771 million. The top line also increased 28.6% year over year and 30.6% from the fourth-quarter fiscal 2020 actuals. Same-store sales rose 23.8% year over year and 35.4% from the fourth-quarter fiscal 2020 reading.

E-commerce sales jumped 8.7% from the prior-year quarter’s level to $556 million. Brick-and-mortar sales grew 34.6% year over year to $2.3 billion.

A Sneak Peek Into Margins

Adjusted gross profit in the reported quarter amounted to $1,157.8 million, up from $869.5 million in the year-ago fiscal’s comparable quarter. Gross margin came in at 41%, which expanded 120 basis points (bps) year over year on leveraged fixed costs and lower distribution costs.

Selling, general & administrative expenses (SG&A) came in at $745.8 million, up from $573.8 million in the prior fiscal year’s comparable quarter. Signet reported an adjusted operating income of $411 million, significantly up from $293.8 million recorded in the year-ago fiscal quarter. As a rate of sales, operating margin expanded 120 bps to 14.6%.

Segment Discussion

Sales in the North America segment increased 26.9% year over year to $2.6 billion. Same-store sales jumped 22.2% from the year-ago quarter’s levels. Average transaction value (“ATV”) rose 16.8%, while the number of transactions climbed 3.6%

The segment’s e-commerce sales grew 14% year over year to $514.5 million, while brick-and-mortar same-store sales jumped 30.6% to $2.1 billion.

Sales in the International segment surged 49% year over year to $183.4 million. Same-store sales at the segment increased 50.2% year over year. ATV dipped 2.2%, while the number of transactions increased 37.6%. E-commerce sales declined 30.8% to $41.5 million, while brick-and-mortar same-store sales surged 124.9% to $141.9 million.

Financial Details

Signet ended the quarter with cash and cash equivalents of $1,418.3 million, accounts receivable, net of $19.9 million and inventories of $2,060.4 million. Long-term debt was $147.1 million at the end of the reported quarter. Total shareholders’ equity was $1,564 million at the end of the quarter.

For fiscal 2022, Signet generated net cash of $1.3 billion from operating activities. It had adjusted free cash flow of $1,046.4 million at the end of the fiscal year.

During fiscal 2022, Signet repurchased roughly 3.2 million shares for $261.8 million. As of Jan 29, 2022, SIG had nearly $413 million left under the authorization. The company’s board has declared an 11% hike in its quarterly cash dividend to 20 cents per share for the first quarter of fiscal 2023. This dividend is payable May 27, 2022 to shareholders of record as of Apr 29, with an ex-dividend date of Apr 28.

We note that Signet had 2,854 stores as of Jan 29, 2022.

Outlook

For fiscal 2023, management expects total revenues of $8.03-$8.25 billion, up from $7.83 billion delivered in fiscal 2022. Adjusted operating income is anticipated in the range of $921-$974 million, suggesting a rise from $908.1 million recorded last fiscal. Adjusted earnings per share are envisioned in the bracket of $12.28-$13.00 versus $12.28 earned in fiscal 2022. Capital expenditures are likely to be nearly $250 million.

For first-quarter fiscal 2023, management expects revenues of $1.78-$1.82 billion. Adjusted operating income is expected at $177-$186 million.

However, management projects continued inflationary pressures in the diamond market during fiscal 2023. It expects a certain shift in consumer discretionary spending from the jewelry category, indicating decelerating levels of consumer confidence and pent-up demand for the experience-oriented categories in the fiscal year.

More Solid Picks You May Look at

Some top-ranked stocks are Capri Holdings (CPRI - Free Report) , Tapestry (TPR - Free Report) and BOOT Barn Holdings (BOOT - Free Report) .

Capri Holdings, which offers accessories and footwear, sports a Zacks Rank #1 at present. CPRI has an expected earnings per share growth rate of 53.9% for three-five years.

The Zacks Consensus Estimate for Capri Holdings’ current financial-year EPS suggests growth of 215.8% from the year-ago period’s corresponding figure. CPRI has a trailing four-quarter earnings surprise of 1,018.2%, on average.

Tapestry, a renowned designer of fine accessories, presently carries a Zacks Rank #2 (Buy). TPR has a trailing four-quarter earnings surprise of 28.2%, on average.

The Zacks Consensus Estimate for Tapestry’s current-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the corresponding year-ago period’s levels. TPR has an expected EPS growth rate of 12.5% for three-five years.

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, presently carries a Zacks Rank #2. BOOT has an expected EPS growth rate of 20% for three-five years.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period’s corresponding figures. BOOT has a trailing four-quarter earnings surprise of 47.1%, on average.