Specialty retail jeweler Signet Jewelers Limited (SIG, SIG.L) Thursday reported increased profit for the second quarter, backed by strong sales growth in the U.S. Earnings topped Wall Street estimates while revenue fell shy of expectations.
Mike Barnes, CEO of Signet, said: "We delivered strong second quarter results driven by a 12.5% increase in same store sales at Kay and positive same store sales in the UK. This combined with expansion in operating margin drove a double digit increase in earnings per share.''
Net income climbed to $70.7 million or $0.85 per share from last year's $66.3 million or $0.76 per share. On average, 9 analysts polled by Thomson Reuters expected earnings of $0.83 per share for the quarter. Analysts' estimates typically exclude special items.
Sales advanced to $853.9 million from $797.6 million. Analysts expected revenues of $857.53 million.
In the US division, sales climbed 9.2 percent to $701.9 million, while in the UK division, sales slipped 1.7 percent to $152.0 million. eCommerce sales climbed around 40 percent to $24.2 million.
In the U.S., sales of the Kay brand totaled $418.6 million, while Jared generated $222.4 million.
Same-store sales grew 7.1 percent, compared to an increase of 9.9 percent in the 13 weeks ended July 30, 2011.
Looking forward to the third quarter, earnings per share are expected to range from $0.34 to $0.38. Analysts expect the company to earn $0.36 per share. Same store sales are expected to be in the low to mid single digit range, including the impact of a one-time watch event at Jared in the third quarter of fiscal 2012.
Further, Signet said its fiscal 2013 would have an additional week, which is expected to increase sales by around $50 million. However, this will have a negative impact on the same store sales calculation for the fourth quarter and fiscal year as the sales in the comparable calendar week last year were $89.3 million and included a promotional event ahead of Valentine's Day, which shifts into Fiscal 2014.
This additional week is expected to result in an operating loss of $2 million to $4 million, reflecting advertising expense which remains in fiscal 2013 and the calendar shift that impacts sales.
SIG, which closed at $47.50 on Wednesday, is up 0.65 percent in pre-market activity.
SIG.L is currently up 0.9 percent at 3,041.00 pence.
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