Shares of Signet Jewelers (NYSE:SIG), the world's largest retailer of diamond jewelry with roughly 3,600 stores under name brands of Kay Jewelers, Zales, Jared, among others, are jumping more than 22% higher as of 11:05 a.m. EDT after the company's second quarter provided investors with rare optimism found with brick-and-mortar retailers.
Signet's second-quarter revenue moved 1.9% higher, driven by a 1.4% increase in comparable-store sales, to just under $1.4 billion, which was good enough to top analysts' estimates calling for $1.33 billion. The better-than-expected top line was also driven by e-commerce platform improvements, a strong Mother's Day performance, and simply better marketing, according to the company. The solid top-line results filtered down to the bottom where Signet's $1.33 earnings per share was much better than estimates calling for a more modest $1.04-per-share result.
CEO Virginia C. Drosos also announced an acquisition, saying, "Our encouraging second quarter performance reflects Signet's fundamental competitive strengths and the progress we are making on our strategic priorities. We delivered positive same store sales performance and managed our cost base to deliver operating margin expansion in a highly promotional environment. Furthermore, today we announced the acquisition of JamesAllen.com to add a leading, fast-growing online jeweler to our portfolio."
As a massive retailer in a fragmented industry, Signet has the ability to be a great investment if it can continue to leverage its scale and effectively market to its brick-and-mortar consumers as well as a growing number of online shoppers. Management believes the acquisition of JamesAllen.com better positions Signet for the upcoming holiday season, which gives it the opportunity to prove the company's business is strengthening after its stock price has dwindled 40% over the past three years.