Shares of Signet Jewelers (NYSE: SIG) jumped almost 9% on June 9 after the diamond jewelry retailer posted impressive first-quarter earnings and reiterated its FY2023 guidance.
Meanwhile, the company announced that it has expanded its share repurchase authorization by $500 million.
Q1 Beat
The company reported stellar quarterly earnings of $2.86 per share, significantly higher than analysts’ estimates of $2.38 per share. It had reported earnings of $2.23 per share in the same quarter last year.
Meanwhile, revenue climbed 8.9% year-over-year to $1.8 billion but missed the Street’s estimate by 10 million.
The revenue growth is attributed to higher same-store sales and a whopping 91.6% increase in the International segment sales.
Fiscal 2023 Outlook
Based on the company’s robust first-quarter results, management has reaffirmed the financial guidance for FY2023.
The company forecasts FY2023 total revenue to be in the range of $8.03-$8.25 billion versus the consensus estimate of $8.03 billion. The company projects adjusted earnings in the range of $12.72 to $13.47 per share against the consensus estimate of $11.81 per share. Operating income is expected to be in the range of $921-$974 million.
For the fiscal second quarter, revenues are projected to be in the range of $1.79 billion to $1.82 billion versus the consensus estimate of $1.81 billion. Operating income is likely between $188 million and $204 million.
Management’s Take
The Chief Financial and Strategy Officer of Signet Jewelers, Joan Hilson, said, “While we anticipated and experienced softening within lower price points resulting from heightened inflation and the lack of stimulus, we delivered offsets through tailored assortments, digital capabilities, and enhanced services to maintain higher average transaction values.”
“At this time, we continue to focus on the factors under our control and leverage our competitive advantages as we navigate the impact of this macro-economic environment on consumer behavior. We believe that the strategies, agility and discipline of our team will enable us to continue to drive long-term value for our shareholders,” Hilson added.
Wall Street’s Take
Following the company’s first-quarter results, Wells Fargo analyst Ike Boruchow reiterated a Buy rating on the stock and raised the price target to $105 (54.8% upside potential) from $100.
Boruchow said, “SIG remains one of the more unique names in our universe—the model has been one of the strongest in retail over the past 24 months (the business has completely transformed itself across revenues, margins and balance sheet).”
Overall, the stock has a Moderate Buy consensus rating based on two Buys and two Holds. Signet Jewelers’ average price target of $101.25 implies 49.27% upside potential from current levels.
Conclusion
While the rest of the retail industry is struggling with multiple headwinds, Signet has registered an impressive quarter. Meanwhile, the company’s reaffirmed guidance and increased buyback program reflect strong management confidence in the improved fundamentals of the company.
