Signet Q3 2023 Earnings Report
Key Takeaways
Signet Jewelers reported strong third quarter results, exceeding both top-line and bottom-line guidance. Total sales were $1.6 billion, up 2.9% compared to Q3 of FY22. The company raised its full-year guidance with confidence in the sustainability of an annual double-digit non-GAAP operating margin.
Total sales were $1.6 billion, up 2.9% (up 4.2% on a constant currency basis) to unusually heightened sales in Q3 of FY22, resulting in part from government benefit programs and the Company's strategic transformation including marketing initiatives, and up 33.3% vs. Q3 of FY20.
Same store sales (“SSS”) down 7.6% to Q3 of FY22.
GAAP diluted earnings per share ("EPS") of $0.60, down from diluted EPS of $1.45 in Q3 of FY22, including $0.14 in charges relating to the fair value adjustment of acquired inventory as well as acquisition and integration-related charges.
Non-GAAP diluted EPS of $0.74, down from $1.43 in Q3 of FY22.
Signet
Signet
Signet Revenue by Segment
Signet Revenue by Geographic Location
Forward Guidance
Signet is providing its fourth quarter and full year Fiscal 2023 sales and operating income guidance on a non-GAAP basis.
Positive Outlook
- The Company’s outlook includes a level of consumer pressure, including inflation and the impact of stimulus, similar to what is currently being experienced.
- The Company's outlook for the fourth quarter and the full year of Fiscal 2023 includes the impact of the Blue Nile acquisition and continuing unfavorable revenue impact from foreign currency.
- Signet continues to anticipate some shift of consumer discretionary spending away from the jewelry category reflecting pent-up demand for experience-oriented categories.
- Signet’s efforts to mitigate supply chain disruption have been effective thus far. Guidance assumes no significant disruptions in availability of inventory.
- The Company’s outlook factors in some flexibility in the level of promotion during the 4th Quarter of Fiscal 2023.
Challenges Ahead
- The Company’s outlook does not include a material worsening of macroeconomic factors which could impact consumer spending patterns and have associated impacts on business performance.
- Annual effective tax rate of approximately 17% assumes no additional discrete items and no changes in current tax laws during the remainder of Fiscal 2023.
- The above guidance excludes non-recurring charges for Fiscal 2023 related to the resolution of a previously disclosed legal matter of $190 million, approximately $17 million relating to the fair value adjustment of acquired inventory that will be recognized within cost of sales in Fiscal 2023, and the non-cash, non-operating charges for the buy-out of substantially all of the UK pension obligations of approximately $135 million.
- Earnings per share includes share repurchases through December 2, 2022, as well as the dilutive effect of the 8.1 million preferred shares.
- Capital investments up to $215 million, reflecting continued investments in Connected Commerce capabilities, banner differentiation and technology harmonization. The expected capital investments have been reduced as a result of supply chain delays related to differentiated banner investment in stores.