Why Signet Jewelers Ltd. Stock Is Plunging Today

SIG is making restructuring plans

Signet Jewelers Ltd. (NYSE:SIG) was falling hard today on news of the company’s restructuring plan.

Signet Jewelers Ltd.’s restructuring plan will take three years to complete. The company says that it plans to improve cost efficiencies and then reinvest those savings into other growth efforts. These efforts include improving its e-commerce business, OmniChannel capabilities and innovation in product assortment and store experiences.

Among Signet Jewelers Ltd.’s restructuring plans is its decision to close 200 stores. The company says that it hopes to achieve this goal by the end of fiscal 2019, which is its current year. It also says that 75% of the stores closing are nearby its other locations. It expects 30% of revenue from closing stores to transfer to the remaining stores.

Signet Jewelers Ltd. says that the reduction in store count will having it shrinking the amount of locations in malls. It also says that the closures will have it leaving some regional areas.

The restructuring plan was announced in the company’s earnings report for its fiscal fourth quarter of 2018. In this report, Signet Jewelers Ltd. reported revenue of $2.29 billion. This is up 1% from its revenue of $2.27 billion from the same time last year. It also beat out Wall Street’s revenue estimate of $2.24 billion for the period.

Despite the increase to revenue, Signet Jewelers Ltd. saw its comparable sales for its fiscal fourth quarter of 2018 drop. The company notes that comparable sales were down 5.2% from the same period of the year prior. This is because comparable sales exclude the extra 14th week in the quarter that wasn’t present in the fiscal fourth quarter of 2017.

Earnings per share for the fiscal fourth quarter of 2018 were $4.28. This is up from its earnings per share of $4.03 from the fiscal fourth quarter of 2017. It also beat analysts’ earnings per share estimate of $4.25 for the quarter.

Signet Jewelers Ltd. also says that it is expecting earnings per share for the fiscal full year of 2019 to range from $3.75 to $4.25. This is bad news for SIG stock as Wall Street is looking for earnings per share of $6.09 for the year.

SIG stock was down 11% as of noon Wednesday.

As of this writing, William White did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2018/03/signet-jewelers-stock-drops-on-restructuring-plan/.

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