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Signet Beats Q4 2019 Estimates, Stock Rises

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Key takeaways from Signet’s earnings results

On April 3, Signet Jewelers (SIG) posted better-than-expected earnings results for the fourth quarter of fiscal 2019 (which ended on February 2). Signet stock was trading 4% higher in the premarket session, reflecting the company’s sales and earnings beat.

Signet’s fourth-quarter top line marked a YoY (year-over-year) fall, reflecting a heightened promotional environment amid increased competition. An increase in credit costs affected the company’s number of transactions and, in turn, its sales. Despite challenges, Signet surpassed analysts’ sales estimate as the benefits of a clearance sale and a timing shift in promotions at Zales and Peoples Jewellers, respectively, supported its top line. Signet’s same-store sales decreased 2%, reflecting a lower number of transactions.

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In comparison, rival Tiffany & Co. (TIF) missed analysts’ sales estimate in the fourth quarter, reflecting lower tourist spending.

Weak sales weighed on Signet’s profit margins and, in turn, its EPS. Its adjusted earnings fell 7.5% but surpassed analysts’ consensus estimate, reflecting tax benefits. Tiffany’s bottom line also benefited from tax adjustments, but its margins remained weak.

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Key financials

Signet Jewelers posted sales of $2.2 billion in the fourth quarter of fiscal 2019, slightly higher than analysts’ estimate. However, its top line fell 6.0% YoY. Its same-store sales fell 2%, and its adjusted EPS fell 290 basis points to 11.2%. Signet posted adjusted EPS of $3.96, down 7.5% on a YoY basis but better than analysts’ consensus estimate of $3.82.

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