Please ensure Javascript is enabled for purposes of website accessibility

Why Signet Jewelers Is Tumbling This Morning

By Rich Duprey - Sep 3, 2020 at 12:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock fell even as the jewelry store operator trounced analyst expectations on the top and bottom lines.

What happened

Shares of Signet Jewelers (SIG 2.91%) were falling 9% in morning trading Thursday despite the jeweler reporting second-quarter earnings that showed upbeat guidance and posting significantly narrower losses than what Wall Street was expecting.

So what

The decline in the share price erased all of the gains Signet's stock made in premarket trading when it had been up as much as 5%. It seems this could be a case of "sell the news," as the financial report was fairly upbeat.

Diamond ring being cleaned

Image source: Getty Images.

Now what

Revenue dropped 35% in the period to $888 million, well ahead of analyst predictions of $788 million, and the jeweler swung to adjusted losses of $1.13 per share from a $0.51-per-share profit last year, but it trounced estimates of losses of $2.07 per share.

The lower output from last year isn't a surprise as the coronavirus pandemic upset the jewelry store chain's turnaround plan and closed all 3,200 stores it operates under the Kay Jewelers, Zales, and Jared brands, among others. Same-store sales dropped over 30% from last year.

What is surprising is the reversal of sentiment by investors since CEO Gina Drosos said comps turned positive late in the quarter as consumers returned when Signet's stores began reopening. "Momentum has continued into Q3," she said in a company statement, "with preliminary August same store sales of 10.9% and eCommerce growth of 65.2%."

Signet's stock has tripled since March, but it remains down 14% year to date.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Signet Jewelers Limited Stock Quote
Signet Jewelers Limited
SIG
$67.82 (2.91%) $1.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.