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Signet’s Q1 operating income plummets

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Expecting momentum: Virginia C. Drosos, CEO of Signet Jewelers (File photograph)

Bermuda-domiciled Signet Jewelers, the world's largest retailer of diamond jewellery, has reported first quarter fiscal 2025 operating income of $49.8 million, down $51.9 million from Q1 of FY24.

Both revenues and earnings declined year over year and same-store sales fell 8.9 per cent from the year-ago period.

Business Insider said: “The gross profit in the fiscal first quarter amounted to $572.4 million, down 9.4 per cent from $632 million in the year-ago quarter.

“We note that the gross margin remained flat year over year to 37.9 per cent in the quarter under review.

Signet Jewelers has grown its line of lab-grown diamonds in the fashion segment of its business

“The adjusted merchandise margin increased 100 basis points, driven by growth in services and the introduction of new products, including the expansion of lab-grown diamonds in the fashion segment.

“However, this gain was partially offset by the deleveraging of occupancy costs due to lower sales.”

Results for the 13-week period ending May 4, show a diluted loss per share of $0.90, compared with diluted earnings per share of $1.79 in Q1 of FY24.

Debate over lab-grown diamonds

A debate about whether or not lab-grown diamonds are the real deal, was reported by the Daily Mail last week.

The publication said there are those who claim that they are without value and not acceptable as an engagement ring.

The report quotes Bridesthat the lab-grown stones are produced in an environment that is extremely similar to the Earth's surface, meaning that they have the same chemical and molecular makeup.

They also have an identical physical and optical compilation.

There remains a stigma in some circles though, and some diamond recipients will still turn up their noses at anything other than what they feel is the real thing.

The company said the current year diluted loss per share reflects the impact of a deemed dividend of $85.1 million related to the redemption of half of the preferred shares in Q1.

Signet reported sales of $1.5 billion, down $157.2 million or 9.4 per cent from Q1 of FY24.

Cash and cash equivalents, at quarter end, were $729.3 million, compared with $655.9 million in Q1 of FY24.

“Our results reflect notable acceleration from a sluggish February to the top half of expectations, with an even stronger May,” said Signet chief executive Virginia C. Drosos.

“Compared to the previous quarter, we increased North America engagement unit sales by 400 basis points excluding digital banners.

“Further, customers continue to respond well to our new product offerings and loyalty programme, reflected in a meaningful improvement in comparable sales for fashion since February.

“We expect continued momentum in the second quarter, leading to a positive same store sales inflection in the second half of fiscal 25.”

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Published June 17, 2024 at 1:00 pm (Updated June 17, 2024 at 6:17 pm)

Signet’s Q1 operating income plummets

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