Shares of Signet Jewelers (NYSE:SIG) 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.
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.
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.