What happened
Shares of Signet Jewelers (SIG 1.38%) were up 20% at 11:13 a.m. ET on Tuesday after the company reported better-than-expected earnings results for the third quarter. The company also raised its full-year outlook.
So what
It's encouraging to see Signet post a sales increase of 4.2% year over year, excluding currency changes, especially given inflation and other macroeconomic headwinds. Not many retailers are exceeding expectations and raising guidance, which is why the stock is up so much today.
However, the quarter wasn't all flash and bling. Same-store sales were still down 7.6%, excluding the results of Diamonds Direct and Blue Nile, which the company acquired. Adjusted operating profit was cut nearly in half to $58 million, although Signet is operating in a much better position than before the pandemic, when the company was less profitable.
Now what
The company is in a position of strength heading into the all-important holiday shopping season. Signet's inventory is down 2% over the year-ago quarter, which is a good sign that it is not dealing with excess inventory like some retailers.
Signet also has experienced staff at stores to serve customers. CFO Joan Hilson noted on the earnings call that Signet is using store-level data to fine-tune staffing hours to optimize sales per labor hour, which shows how management is focused on maximizing unit economics.
These are all signs to investors that Signet is navigating this soft economy well, which keeps it in position to potentially deliver even better returns when the economy is stable.
