Kay, Zales jewelry stores parent's stock soars, as marriage proposals increase

By Tomi Kilgore

Signet Jewelers says quarterly same-store sales keep improving, and could turn positive for the first time in more than 2 years

Shares of Signet Jewelers Ltd. sparkled on Thursday, after the diamond seller beat quarterly profit expectations, and indicated it was on course to break a long streak of same-store sales declines as marriage proposals are rising.

The stock (SIG) shot up 17.7% in morning trading toward a three-month high. It was also headed toward its biggest one-day gain since it soared 20.3% on Dec. 6, 2022.

"Both the internal and external metrics we track indicate increasing engagements as we head into the back-half of the year," said Chief Executive Gina Drosos.

Drosos said on the post-earnings call with analysts that Google and Instagram searches for engagement rings are now up "significantly" in recent months.

And, "couples achieving at least 26 of our proprietary engagement milestones where they become highly likely to get engaged is now [9 percentage points] higher than last year and the highest number of couples ready to get engaged we've seen since we began tracking these milestones a few years ago," Drosos said, according to an AlphaSense transcript.

Read: Signet Jewelers has a pretty good idea when you'll get engaged.

Drosos acknowledged, however, that customers are approaching engagement "in a more cautious way" in the current economic environment, which is slowing the recovery.

For the fiscal second quarter to Aug. 3, the company swung to a net loss of $46.4 million, or $2.28 a share, from net income of $172.5 million, or $1.38 a share, in the same period a year ago.

Excluding nonrecurring items, such as $3.73 a share in impairment charges, adjusted earnings per share of $1.25 topped the FactSet consensus of $1.14.

Total sales fell 7.6% to $1.491 billion, just below the FactSet consensus of $1.502 billion, as a 6.9% drop in North America sales to $1.398 billion offset a 15.2% jump in international sales to $86.5 million.

Same-store sales, or sales of stores open at least 12 months, fell 3.4% to beat expectations of a 4.1% decline.

While same-store sales have declined for nine straight quarters, that marked that fifth straight quarter that they showed sequential improvement, as the company continues to emerge from the "engagement trough" caused by COVID.

And so far this quarter, the company said same-store sales have turned positive, and sales of engagement units - otherwise known as engagement rings - are now growing.

The company guided for third-quarter same-store sales to range from down 1% to up 1.5%, which compares with the current FactSet consensus of down 0.6%.

For the full fiscal year, the company continues to expect same-store sales to range from down 4.5% to up 0.5%.

Signet also reiterated its guidance ranges for total sales of $6.66 billion to $7.02 billion and for EPS of $9.90 to $11.52.

Despite Thursday's rally, the stock has slumped 14.3% year to date, while the SPDR S&P Retail ETF XRT has edged up 0.6% and the S&P 500 (SIG) has gained 16.7%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-12-24 1024ET

Copyright (c) 2024 Dow Jones & Company, Inc.