Shares of Signet Jewelers Ltd. (NYSE:SIG) were up 25% as of 11 a.m. EDT Thursday after the jewelry retailer announced stronger-than-expected fiscal second-quarter results and boosted its full-year guidance.
On the former, Signet's quarterly revenue climbed 1.5% year over year to $1.42 billion, which translated to adjusted earnings of $0.52 per share, down from $1.33 per share in the same year-ago period. Analysts, on average, were only modeling earnings of $0.20 per share on revenue of $1.34 billion.
"While it is still early in our journey, we are encouraged by our improving year-to-date performance as we execute against our Path to Brilliance transformation plan," said Signet CEO Virginia Drosos. "During the second quarter, we continued to see stabilization in same store sales, and we remain confident that we have the rights strategies in place to continue to drive operational improvement over the long-term."
To be sure, Signet's top line included a modest 1.7% increase in same-store sales, accelerating from essentially flat comps last quarter. Signet also completed the year-long strategic outsourcing of its non-prime credit portfolio, receiving $445.5 million in additional proceeds in the process. That brought total transaction proceeds from the credit-outsourcing initiative to $1.4 billion, allowing Signet to repurchase 25% of its total shares outstanding.
What's more, Signet increased its full fiscal-year guidance to call for same-store sales to be flat to down 1.5% (compared to down in the low- to mid-single digit range before), and for total sales in the range of $6.2 billion to $6.3 billion (up from $5.9 billion to $6.1 billion previously). Signet also now expects adjusted earnings per share of $4.05 to $4.40, up from its old guidance range of $3.75 to $4.25.
All things considered, this was an impressive beat and raise from Signet that seems to mark an inflection toward significantly better results as its strategic initiatives take hold. With shares down modestly so far in 2018 despite a healthy bounce following its fiscal Q1 report in June, the stock is simply responding in kind.