What happened

Shares of Signet Jewelers (SIG 1.58%) were falling today after the jewelry retailer and owner of brands including Jared and Blue Nile posted solid results in its first-quarter earnings report, but trimmed its guidance due to macroeconomic headwinds that began at the end of the quarter.

As a result, the stock was down 9.5% as of 1:16 p.m. ET.

So what

Same-store sales in the quarter fell 13.9% as the pandemic tailwinds continue to roll off and consumer spending shifts to categories like travel and restaurants. Overall revenue was down 9.3% to $1.67 billion, which was slightly ahead of the analyst consensus at $1.65 billion.

A delay in marriage engagements resulting from COVID-19 also weighed on the business, and gross margin fell 140 basis points to 37.9%, while selling, general, and administrative expenses were flat. As a result, adjusted earnings per share dropped from $2.86 to $1.78, though that topped the consensus at $1.49.

CFO Joan Hilson commented on the challenging macro environment, saying, "Our updated Fiscal 2024 guidance reflects a recent deceleration of trends that have persisted into the second quarter, including a softer than expected Mother's Day, increasing macro-economic pressures on consumers at more price points, and deeper competitive discounting."

Now what

For the full year, Signet trimmed its guidance from $7.67 billion-$7.84 billion in revenue to $7.1 billion-$7.3 billion, representing an 8.2% decline at the midpoint. On the bottom line, it now sees adjusted earnings per share of $9.49-$10.09, down from its earlier forecast of $11.07-$11.59, and worse than the $11.80 it delivered in fiscal 2023. 

The guidance cut was tough to swallow for investors, but Signet still looks like an excellent value play after today's sell-off, trading at a forward P/E of less than 7.

The company is building its competitive advantages by investing in its digital channel and streamlining costs by closing stores, and continues to gain market share in the fragmented jewelry industry.

If you can stomach the volatility, the stock looks like a good buy at the current price.