Stocks fell on Thursday, with major indexes waffling between positive and negative territory ahead of an expected speech on financial stability from Federal Reserve Chair Janet Yellen. The S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) both incurred small losses by the end of the trading session.
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Consumer goods stocks endured a particularly rough day, with the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) falling 1.4%. But healthcare shares enjoyed a much more pleasant session; the Health Care SPDR ETF (NYSEMKT:XLV) gained 0.3%.
Signet sparkles with strong earnings
Shares of Signet Jewelers skyrocketed 16.7% after the company -- best known as the parent of Zales, Jared, and Kay, Gordon's, and Piercing Pagoda -- revealed that sales climbed 1.9% year over year to just under $1.4 billion, including a 1.4% increase in same-store sales. Signet noted that growth was driven by fashion jewelry including bracelets, rings, and necklaces, as well as strength in its branded bridal segment.
On the bottom line, Signet's earnings per share climbed 25.5% year over year to $1.33, bolstered by a combination of its cost-management efforts, its strategic decision to outsource its credit portfolio, and the company's recent move to repurchase 12% of its outstanding equity through an accelerated open-market share repurchase.
In comparison, investors were only anticipating Signet would achieve earnings of $1.04 per share on lower revenue of $1.33 billion.
Signet also announced it has agreed to acquire JamesAllen.com parent R2Net for $328 million in cash, calling it a "highly strategic" purchase that should help accelerate its digital initiatives and omnichannel capabilities.
"Our encouraging second quarter performance reflects Signet's fundamental competitive strengths and the progress we are making on our strategic priorities," added CEO Virginia Drosos. "We delivered positive same store sales performance and managed our cost base to deliver operating margin expansion in a highly promotional environment."
Guess? stock is fashionable again
Guess? shares popped 19.1% today after the clothing retailer's second-quarter results handily exceeded its financial guidance. Revenue climbed 5.3% year over year (4.9% in constant currency) to $573.7 million, helped by strength in both Europe (up 18.8% in constant currency) and Asia (up 17.1%). This translated to 30.4% growth in adjusted net income to $16.1 million, and 26.7% growth in adjusted net income per share to $0.19. By comparison, three months earlier Guess? told investors to expect adjusted earnings per share in the range of $0.08 to $0.11 on currency-neutral revenue growth of only 2% to 4%.
To be fair, Guess? continued struggling in the Americas, where constant-currency retail revenue fell 10.8% and wholesale revenue declined 6.8%. But coupled with its ongoing cost-reduction efforts, the company is accelerating its strategy of reducing its U.S. footprint -- which represents under 36% of total sales now -- in favor of focusing on more promising geographies.
As a result, for the full year, Guess increased its guidance to call for revenue to climb between 6% and 7.5% (up from 3.5% to 5% previously), and for adjusted earnings per share of $0.52 to $0.60 (up from $0.34 to $0.44 previously).
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