Signet Jewelers Limited recently reported that same store sales for the 13 weeks ended July 30, 2016 (Q2 Fiscal 2017), were down 2.3%; while total sales at US$ 1.4 billion fell 2.6%; and total sales at constant exchange rate were lower by 1.3%.

“The decline was fairly broad-based across most store banners and merchandise categories and was particularly pronounced in energy-producing regions,” Signet declared. “Ecommerce sales in the second quarter Fiscal 2017 were US$ 69.6 million, or 5.1% of sales, up US$ 3.7 million, or 5.6%, compared to US$ 65.9 million in the second quarter Fiscal 2016.”

Breaking this down for individual businesses under the Signet umbrella, Sterling Jewelers' same store sales decreased 3.1%, with an average transaction value (ATV) lower by 0.8% and number of transactions down by 3.0%. Zale Jewelry's same store sales decreased 3.0%; though its ATV increased 1.2% and its   number of transactions decreased 4.0%. However, Piercing Pagoda's same store sales increased 6.4%; ATV increased 17.0%; while the number of transactions decreased 7.7%. UK Jewelry's same store sales also increased – by 0.8%; its ATV grew by 2.5% while the number of transactions decreased 3.0%.

“Gross margin was US$ 464.9 million or 33.9% of sales, down 90 basis points versus second quarter Fiscal 2016, due to lower sales partially offset by less purchasing accounting,” Signet said. “Adjusted gross margin rate was 34.0%, down 130 basis points from second quarter Fiscal 2016.”

In second quarter Fiscal 2017 Signet's operating income stood at US$ 119.9 million, or 8.7% of sales, compared to US$ 100.8 million, or 7.2% of sales, in second quarter Fiscal 2016. 

The Company announced a second quarter Fiscal 2017 diluted earnings per share of US$ 1.06 and an adjusted EPS of US$ 1.14.

“Zale integration continues to progress well,” Signet said. “(It is) on track to deliver cumulative synergies of US$ 158 million to US$ 175 million by end of this fiscal year and US$ 225 million to US$ 250 million by end of next fiscal year.”

Signet also reported that over 2.8 million shares were repurchased in the second quarter for US$ 250 million along with insider buying.

“We are disappointed by our Q2 results and market conditions have been challenging particularly in the energy-dependent regions,” commented Mark Light, Chief Executive Officer of Signet Jewelers. “This has contributed to a downward revision in our annual guidance.

He added: “"Demonstrating our confidence in our company, we repurchased nearly four per cent of our outstanding common stock during the quarter coupled with purchases by our Directors and Officers. As announced, and in a further demonstration of confidence in our company, LGP, one of the world's preeminent retail investors, agreed to purchase a $625 million stake in Signet. Finally, our credit review process is proceeding according to plan.”

Continuing in the same vein, Signet announced: “Reflecting the Board's confidence in the strength of the business, Signet's ability to invest in growth initiatives, and the Board's commitment to building long-term shareholder value, a quarterly cash dividend of $0.26 per Signet Common Share was declared for the third quarter of Fiscal 2017 payable on November 28, 2016 to shareholders of record on October 28, 2016, with an ex-dividend date of October 26, 2016.”

As on July 30, 2016, Signet had 3,618 stores totalling 5.0 million square feet of selling space. “Compared to prior year-end, store count decreased by 7 stores,” the Company said.