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Why Signet Jewelers Soared Over 40% Thursday Morning

By Daniel Miller - Jan 16, 2020 at 1:08PM

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Shortly after being downgraded, Signet Jewelers posted strong holiday-season sales and even increased full-year guidance.

What happened

Shares of Signet Jewelers Limited (SIG -9.14%), a retailer of diamond jewelry with store brands that include Kay and Jared, among others, are soaring more than 44% Thursday morning after the company released strong holiday sales data and optimistic guidance.

So what

Signet posted a number of bright spots in its holiday-season sales for the nine weeks ended Jan. 4, 2020. Same-store sales were up 1.6%, driven by North America's 2% increase in same-store sales. Arguably the brightest spot was e-commerce sales, which were up 13.5%, compared to brick-and-mortar same-store sales' 0.2% decline.

"We delivered holiday same store sales growth ahead of our guidance as we continued to implement year two of our Path to Brilliance transformation. Product newness, investments in our digital capabilities, and more targeted marketing campaigns drove both eCommerce and brick and mortar growth in North America," said Virginia C. Drosos, chief executive officer, in a press release.

Display case filled with diamond jewelry.

Image source: Getty Images.

Now what

Signet's holiday season gave investors a boost in confidence, especially considering Wells Fargo's early-January downgrade, which suggested the company's transformation plan would lead to a very challenging year in a competitive industry. Signet's strong holiday season gave management enough confidence to bump up its fourth-quarter and fiscal 2020 guidance. Management now expects fiscal 2020 same-store sales to increase 0.1%, favorable to the prior guidance of a 1% to 1.7% decline.

Signet also expects total sales to check in at $6.1 billion, compared with the prior guidance range between $6.01 billion and $6.05 billion and ahead of analysts' estimates calling for $6.06 billion. But maybe the most eye-popping change to guidance was with adjusted earnings per share: Signet now expects a range between $3.61 and $3.69 per share, well above analysts' estimates of $3.26 adjusted earnings per share.

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Stocks Mentioned

Signet Jewelers Limited Stock Quote
Signet Jewelers Limited
$56.16 (-9.14%) $-5.65
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