A reawakening upper-end consumer lifted Signet Jewelers Ltd. to higher same-store sales and a higher-than-expected fourth-quarter profit, and the momentum has carried into the first quarter.
The jewelry retailer posted net income of $117.2 million, or $1.36 a diluted share, for the three months ended Jan. 30, compared with an impairment-laden net loss of $424 million, or $4.97 a share, a year earlier. Revenues increased 7.1 percent to $1.2 billion from $1.12 billion in the year-ago period. Eliminating special items, basic earnings per share were $1.45 in the most recent quarter versus $1.12 in the year-ago period.
Analysts anticipated a profit of $1.26 a share on sales of $1.18 billion, according to Thomson Reuters.
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Sales grew 6.8 percent to $920.8 million in the U.S. and 8.1 percent to $282.9 million in the U.K. Comparable-store sales were up 5.2 percent for the quarter, as a 7.4 percent rise in the U.S. more than offset a 1.5 percent decline in the U.K.
The company also noted that in the first seven weeks of fiscal 2010, comps have been up 6.4 percent, with the U.S. increasing 7.8 percent and the U.K. down 0.1 percent.
Signet group chief executive officer Terry Burman told WWD that the “upper-midmarket customer” who had “pulled back more drastically” has “shown some signs of more robust spending.”
This was especially apparent in the U.S. at the retailer’s higher-priced Jared chain, which saw sales jump 13.2 percent in the quarter to $247.7 million. Kay, the firm’s value brand, recorded $558.1 million in sales, a 7.4 percent increase over last year’s quarter.
Signet said it “outperformed the U.S. specialty jewelry market” in 2009 and gained market share, but Burman noted the company is planning on a 1 to 2 percent decrease in store openings in 2010. Instead, Signet will focus on remodeling stores, increasing advertising efforts and other investments.
For the year, the jeweler’s net income totaled $164.1 million, or $1.91 a diluted share, versus a year-ago loss of $393.7 million, or $4.62 a share. Sales fell 1.6 percent to $3.29 billion from $3.34 billion in 2008.