Signet Jewelers Limited has announced its first quarter fiscal results for the 13 weeks ending April 30 2016.
The report detailed the diluted earnings per share (EPS) grew 26.4%, and the adjusted EPS grew 20.4%. Same store sales were up up 2.4%, whilst total sales were up 3.2% at $1.6 billion (£1.09 billion). The total sales at a constant exchange rate saw a rise of 3.9%.
The company’s Zale acquisition and integration is reportedly progressing well, with synergies remaining on-target. It has also repurchased over 1.1 million shares in the first quarter for $125 million (£85.3 million).
The reports states in the UK same store sales increased 3.4% to $144m (£98.2m). Average transaction value increased by 4.3%, while the number of transactions decreased 1.0%. This was driven principally by strong sales of diamond jewellery and prestige watches. Transactions declined due primarily to beads and fashion watches.
Signet’s UK division – which includes Ernest Jones and H Samuel – gross margin decreased $1.2 million (£0.8m) compared to the same period last year, and the gross margin rate decreased 30 basis points. The reports says the gross margin rate decline was driven principally by lower sales and merchandise margin deleverage as a result of currency exchange rates.
Mark Light, chief executive officer of Signet Jewelers said: “Signet delivered another period of solid performance resulting in record first quarter EPS and strong operating margin expansion. We gained profitable market share despite a challenging retail environment, through strong sales of Ever Us and other fashion jewelry collections, as well as select branded bridal. Our 26% EPS growth was driven by higher same store sales and total sales along with solid expense management and synergies, leading to 190 basis points of operating margin expansion. In addition to delivering earnings results at the top end of our guided range, we achieved sales growth across real estate formats and in each of our divisions and our credit metrics showed strong sequential improvement.”
Speaking of the company’s acquisition of Zale, Light added: “This Sunday marks the two-year anniversary of the close of our acquisition of Zale. The integration continues to go extremely well across all aspects of our business. The synergies we expect to deliver this year will be mostly driven by operating expense savings as a result of the sound investments and strategic management of the integration over the past couple of years. Learnings from our customer segmentation study and business results since the acquisition have validated our growth assumptions, and we have an enviable position with the three leading U.S. brands in a heavily fragmented and growing middle market jewelry industry. We are pursuing the opportunity to grow square footage both near-term, driven principally by Kay, and medium-term driven more by Zales.
“I want to thank all Signet team members for their contributions to our results. Their superior experience and dedication is the key to our ability to deliver consistently solid performance in an ever-changing environment.”