Signet has seen stronger than expected conversion and average ticket values in the first quarter. The Company believes this topline strength is likely due to a combination of traction from strategic initiatives as well as tailwinds from the stimulus, tax refunds and consumer enthusiasm on the heels of vaccine rollouts – particularly during the Company’s guest appreciation events in late March 2021.
In addition, the Company has evaluated the impact of inventory delays related to recent COVID-19 surges in India and other parts of the world. At this time, Signet believes it has mitigated these short-term impacts; however, if the duration and magnitude of these inventory slowdowns intensify, there could be future negative impacts on the Company’s full-year guidance.
Fiscal 2022 Guidance
| Updated Guidance | Guidance as of 3/18/21 | ||||||
| First Quarter | Full Year | First Quarter | Full Year | ||||
| Total revenue (in billions) | $1.57 to $1.60 | $6.00 to $6.14 | $1.42 to $1.46 | $5.85 to $6.00 | |||
| Same store sales (1) | 97% to 99% | 17% to 20% | 80% to 84% | 14% to 17% | |||
| Non-GAAP operating income (in millions) (2) | $85 to $100 | $335 to $364 | $40 to $60 | $290 to $324 | |||
| (1) Same store sales include physical stores and eCommerce sales | |||||||
| (2) See description of non-GAAP measures below | |||||||
The forecasted non-GAAP operating income provided above excludes potential non-recurring charges. However, given the potential impact of non-recurring charges on the GAAP operating income, we cannot provide forecasted GAAP operating income or the probable significance of such items without unreasonable efforts. As such, we do not present a reconciliation of forecasted non-GAAP operating income to corresponding GAAP operating income.
The Company is reiterating the following underlying assumptions supporting its Full Year Fiscal 2022 Guidance:
- Signet expects stronger sales performance in the first half of the fiscal year. As the vaccine rollout progresses, there could be a shift of consumer discretionary spending away from the jewelry category toward experience-oriented categories, the magnitude and timing of which is difficult to predict. Further, Signet expects categories with pent-up demand to be promotional in order to capture discretionary spending. As such, the Company is planning for increased marketing expenses to continue to fuel momentum in the front half as well as to proactively manage against shifts in consumer spending as the year progresses. While Signet’s transformational initiatives continue to gain traction, the Company is conservatively planning for same-store sales to be negative in the second half of the fiscal year. Depending on the timing and extent of potential shifts in spending, future results could differ materially from current guidance.
- The Company’s Inspiring Brilliance strategy requires additional investments in digital and technology to further strengthen our competitive advantage and long-term positioning within the jewelry category. To partially mitigate the increased level of investment, gross cost savings of $50 million – $75 million are expected in Fiscal 2022, with continued benefits from closed stores and operational efficiencies. Cost savings are expected to benefit both SG&A and gross margin.
- Signet has planned Fiscal 2022 capital expenditures in the range of $150 million to $175 million, reflecting continued investments in technology and innovation. Recall that the Company reduced its capital expenditures in Fiscal 2021 to $83 million given the cash conservation focus in response to the pandemic.
- The Company is planning to close over 100 stores in Fiscal 2022 and will open up to 100 locations, primarily in highly efficient kiosks.
- Continued uncertainty surrounding multiple factors includes the magnitude and potential resurgence of COVID-19 in key trade areas, extended duration of heightened unemployment, supply chain disruptions and macro or governmental influences on consumers’ ability to spend, particularly in discretionary categories like jewelry. Further, there can be no assurance that preliminary quarter-to-date trends will continue for the remainder of the first quarter and are not indicative of future performance. Please see disclosures within the Safe Harbor Statement for other risk factors.
