MW People bought cheaper jewelry as holiday gifts. That's sinking Signet's stock.

By Tomi Kilgore

Kay Jewelers, Zales and Jared parent cut its Q4 sales guidance as holiday sales disappointed

Shares of Signet Jewelers Ltd. were headed for their worst day in nearly five years, after the parent of Kay Jewelers, Zales and Jared jewelry store chains lowered its sales outlook, citing a disappointing performance over the holiday.

The problem was that its customers flocked to discounted items more than the company expected.

The stock $(SIG)$ plunged 22.7% in premarket trading, putting it on track to open around the lowest prices seen since October 2022. It was also in danger of suffering its biggest one-day decline since it plummeted 24.6% on March 23, 2020.

"Engagement and service sales were within expectations and we saw [average unit retail] increase in both bridal and fashion," said Chief Financial Officer Joan Hilson. "However, fashion gifting underperformed as consumers gravitated to lower price points even more than anticipated in a continued competitive environment."

The company said profit margins improved, but by less than expected, amid a "stronger customer response to promotional items."

The company said same-store sales, or sales from stores open at least a year, fell about 2% during the peak selling days leading up to Christmas, which was below its forecasts.

For the fiscal fourth quarter that runs through January, same-store sales are now expected to be down 2.5% to 2%, compared with previous guidance of flat to up 3% and the FactSet consensus for a 1.7% rise.

The guidance range for total sales was cut to $2.32 billion to $2.335 billion from $2.38 billion to $2.46 billion. The current FactSet sales consensus is $2.42 billion.

Also read: Signet Jewelers' stock drops as it faces competition from lab diamonds and misses Wall Street's profit and sales estimates.

The stock has dropped 24.1% over the past three months through Monday, while the SPDR S&P Retail ETF XRT has gained 2.8% and the S&P 500 index SPX has eased 0.4%.

-Tomi Kilgore

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January 14, 2025 07:39 ET (12:39 GMT)

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