Signet Jewelers Shares Collapse After Weak Holiday Sales

Signet Jewelers, the parent company of Kay and Zales, saw its shares sink on Thursday after the company cut its fourth quarter and fiscal 2019 outlook.

Citing weak holiday sales, the retailer has warned that there would be more store closures as holiday sales came up less than what was expected.

Shares dropped over 20% on the news as the diamond retail company announced that sales at stores open for at least 12 months were down 1.3 percent for the nine weeks ended Jan. 5. The company said it saw “reduced traffic during key December gifting weeks.”

“A clearly promotional category heading into holiday – led by department stores that are pushing more aggressively into the category – proved to be too much for Signet to overcome, requiring more intense promotional activity than planned to catch up through December,” remarked Evercore ISI analyst Omar Saad.

Signet says it now expects same-store sales to be down between 1.6 percent and 2.5 percent for the period ended February 2nd. Previously the company had a range of down 1.5 percent to up 1 percent. The company also now expects adjusted earnings per share to be between $3.77 and $3.92, compared with a prior range of $4.35 to $4.59. Analysts were expecting adjusted earnings of $4.43 a share, according to a poll by Refinitiv.

For fiscal 2019, Signet is expecting same-store sales to be roughly flat. Previously the expectation was flat or up to 1%. Adjusted earnings per share are expected to be in the range of $3.53 to $3.69, compared with a prior range of between $4.15 to $4.40.

“We will move decisively to improve profitability through aggressively optimizing our cost structure and continuing to right-size our store base, as well as more effectively managing our inventory,” CEO Virginia Drosos stated.

The company is expected to report earnings on March 14th.

Disclaimer: We have no position in Signet Jewelers Ltd. (NYSE: SIG) and have not been compensated for this article.