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Jan. 17, 2020, 7:49 a.m. EST

This is why Signet Jewelers’ stock had its best day in more than 27 years

Signet Jewelers, whose brands include Zales, Kay and Jared, flips sales outlook to growth from decline after strong holiday sales

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By Tomi Kilgore, MarketWatch


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Shares of Signet Jewelers Ltd. blasted off Thursday, to their biggest one-day gain since the early-1990s, after a strong holiday performance helped flip the fourth-quarter sales outlook to growth from a decline.

The company, which retail store brands include Kay Jewelers, Zales and Jared, said total same-store sales for the nine-weeks ended Jan. 4 rose 1.6% above year-ago levels, as 13.5% growth in digital sales helped offset a 0.2% decline in brick-and-mortar sales.

Among the self-proclaimed world’s largest diamond jewelry retailer’s /zigman2/quotes/204614427/composite SIG +3.00%  store brands, holiday-period same-store sales rose 0.2% for Kay, increased 5.4% for Zales, fell 3.5% for Jared, grew 6.9% for Piercing Pagoda, jumped 26.9% for James Allen and were up 4.5% for Peoples.

As a result, Signet said it now expects same-store sales for the fiscal fourth quarter, which ends in January, to be up 0.1%, compared with the guidance range provided on Dec. 5 of down 4.0% to 2.0%. Net sales are now expected to be $2.12 billion, above previous guidance of $2.03 billion to $2.07 billion.

The stock rocketed 40.2% on heavy volume in midday trading Thursday. That was the biggest one-day percentage gain since it rose 42.9% on Oct. 13, 1992, according to FactSet data. Trading volume swelled to 25.3 million shares, compared with the full-day average of about 2.5 million shares.

/zigman2/quotes/204614427/composite SIG 23.32, +0.68, +3.00%

Signet also raised its guidance for net earnings per share to $3.42 to $3.56 from $2.99 to $3.26, and for adjusted EPS to $3.44 to $3.52 of from $3.01 to $3.16. The FactSet consensus for adjusted EPS was $3.26.

“Product newness, investments in our digital capabilities, and more targeted marketing campaigns drove both e-commerce and brick and mortar growth in North America,” said Chief Executive Virginia Drosos.

In North America, same-store sales grew 2.0%, as growth in bridal and fashion offset declines in beads and watches. E-Commerce sales rose 13.3% and brick-and-mortar same-store sales increased 0.4%.

Signet’s surprisingly strong performance comes after a disappointing holiday-period sales reports from a number of retailers, including Target Corp. /zigman2/quotes/207799045/composite TGT -2.48%  , GameStop Corp. /zigman2/quotes/203755179/composite GME +3.75%  , Victoria’s Secret-parent L Brands Inc. /zigman2/quotes/202062875/composite LB -6.03%  , Macy’s Inc. /zigman2/quotes/201854387/composite M +2.56%  and Kohl’s Corp. /zigman2/quotes/210414114/composite KSS +0.59%  

Signet’s stock, which is headed for the highest close in a year, had now nearly tripled (up 175%) since it closed at a 10-year low of $11.01 on Sept. 4, 2019, which was a far cry from the Oct. 30, 2015 record close of $150.94. Read more about Signet’s fiscal third-quarter results.

After the stock lost 31.6% in 2019, to extend its record yearly losing streak to five years, it started 2020 with a 12.9% plunge, after Wells Fargo analyst Ike Boruchow turned bearish, citing expectations of a continued decline in consumer interest.

It has run up 38.6% year to date, while the SPDR S&P Retail exchange-traded fund /zigman2/quotes/206947004/composite XRT -0.64%  has slipped 0.2% and the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.82%  has edged up 2.7%.

/zigman2/quotes/204614427/composite
US : U.S.: NYSE
$ 23.32
+0.68 +3.00%
Volume: 3.74M
Feb. 28, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
6.35%
Market Cap
$1.22 billion
Rev. per Employee
N/A
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/zigman2/quotes/207799045/composite
US : U.S.: NYSE
$ 103.00
-2.62 -2.48%
Volume: 9.22M
Feb. 28, 2020 6:30p
P/E Ratio
16.46
Dividend Yield
2.56%
Market Cap
$52.19 billion
Rev. per Employee
$209,322
loading...
/zigman2/quotes/203755179/composite
US : U.S.: NYSE
$ 3.60
+0.13 +3.75%
Volume: 4.69M
Feb. 28, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$237.32 million
Rev. per Employee
$416,709
loading...
/zigman2/quotes/202062875/composite
US : U.S.: NYSE
$ 21.66
-1.39 -6.03%
Volume: 12.41M
Feb. 28, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
5.54%
Market Cap
$5.99 billion
Rev. per Employee
$148,898
loading...
/zigman2/quotes/201854387/composite
US : U.S.: NYSE
$ 13.23
+0.33 +2.56%
Volume: 21.30M
Feb. 28, 2020 6:30p
P/E Ratio
7.31
Dividend Yield
11.41%
Market Cap
$4.09 billion
Rev. per Employee
$197,992
loading...
/zigman2/quotes/210414114/composite
US : U.S.: NYSE
$ 39.15
+0.23 +0.59%
Volume: 4.63M
Feb. 28, 2020 6:30p
P/E Ratio
9.00
Dividend Yield
6.85%
Market Cap
$6.13 billion
Rev. per Employee
$156,814
loading...
/zigman2/quotes/206947004/composite
US : U.S.: NYSE Arca
$ 40.28
-0.26 -0.64%
Volume: 9.08M
Feb. 28, 2020 8:00p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
2,954.22
-24.54 -0.82%
Volume: 5.14B
Feb. 28, 2020 5:06p
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Tomi Kilgore is MarketWatch's deputy investing and corporate news editor and is based in New York. You can follow him on Twitter @TomiKilgore.

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