Signet Jewelers Ltd. (NYSE: SIG) experienced a significant stock decline on Thursday following the release of its fiscal third-quarter 2025 earnings report. The company’s performance fell short of expectations, prompting a downward revision of its full-year guidance.
The jewelry retailer reported a year-on-year sales decrease of 3.1% to $1.35 billion, missing the analyst consensus estimate of $1.37 billion. Adjusted earnings per share (EPS) also disappointed, coming in at $0.24 compared to the anticipated $0.33.
Q3 Performance Breakdown
Same-store sales, a key metric for retail performance, declined by 0.7% overall. North American same-store sales saw a decrease of 0.8%, while the international segment experienced a modest growth of 1.6%.
Sales in the North America segment totaled $1.3 billion, representing a 2.3% year-on-year decrease. International sales experienced a more substantial decline of 11.4%, reaching $83.3 million.
Despite maintaining a flat gross margin of 36.0% year-on-year, operating income decreased to $9.2 million from $13.3 million in the previous year. This resulted in a reduced operating margin of 0.7%, down from 1.0% last year.
As of November 2, 2024, Signet Jewelers held $157.7 million in cash and equivalents. The company’s board declared a quarterly cash dividend of $0.29 per share and repurchased approximately 743,000 common shares at an average cost of $89.54 per share, totaling $66.5 million. These repurchases contributed to Signet Jewelers achieving a net debt positive position of $95.3 million.
Challenges and Revised Outlook
CFO Joan Hilson attributed the weaker-than-expected Q3 performance to a competitive market environment. Furthermore, updated fiscal 2025 guidance reflects challenges integrating recently acquired brands Blue Nile and James Allen, leadership transition costs, and the financial impact of early preferred shares redemption.
Signet Jewelers now anticipates fourth-quarter sales between $2.38 billion and $2.46 billion, compared to the consensus estimate of $2.45 billion. Same-store sales growth is projected to be flat to 3%.
For the full fiscal year 2025, the company has lowered its sales outlook to a range of $6.74 billion to $6.81 billion, down from the previous projection of $6.66 billion to $7.02 billion. This contrasts with the consensus estimate of $6.82 billion. Same-store sales are now expected to decline by 2% to 3%, a revision from the prior estimate of a decline of 0.5% to 4.5%.
Adjusted EPS for fiscal 2025 is now projected to be in the range of $9.62 to $10.08, compared to the previous estimate of $9.90 to $11.52 and the consensus estimate of $10.59.
Market Reaction
Following the release of the Q3 results and revised guidance, Signet Jewelers stock experienced a sharp decline, closing down 14.6% at $84.36 on Thursday.
This significant drop reflects investor concern over the company’s performance and its ability to navigate the challenges ahead in a competitive market. The integration of recent acquisitions and the successful execution of its revised strategy will be crucial for Signet Jewelers to regain investor confidence and drive future growth.
