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Signet Shares Up on Q4, Guidance

Same-store sales rise 4.3% and e-commerce revenues 23.6% in quarter.

Kay Jewelers is part of the Signet retail network.

Shares of Signet Jewelers Ltd. rose 5.6 percent in morning trading Thursday as the operator of the Kay and Jared chains exceeded fourth-quarter earnings expectations and raised its quarterly dividend.

The company reiterated its projection that its acquisition of Zale Corp. for $1.4 billion in cash, subject to Zale shareholder approval and other conditions, would be concluded by the end of the calendar year.

In the three months ended Feb. 1, the firm generated net income of $175.2 million, or $2.18 a diluted share, 2 percent above the $171.7 million, or $2.12, posted in the fourth quarter of 2012. The EPS number was 3 cents above the consensus estimate of analysts.

Revenues in the quarter rose 3.4 percent to $1.56 billion from $1.51 billion, with comparable-store sales up 4.3 percent and e-commerce ahead 23.6 percent to $79 million. Gross margin pulled back to 41.5 percent of sales from 42.1 percent in the year-ago period.

 

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“We’ve had the ability to see about half of the [first] quarter and Q1 has started off pretty well,” Mike Barnes, chief executive officer of the company, told analysts on a Thursday morning conference call. “We feel good about the guidance that we gave…and we feel good about meeting our objectives for the year.”

Signet projected a same-store sales increase of between 3 and 4 percent for the first quarter with EPS of between $1.24 and $1.28. The high point of the range matched the current consensus estimate.

The firm’s comp results were split between a 4 percent increase in the U.S., where it operates Kay and Jared, and a 5.7 percent increase in the U.K., where its nameplates include H. Samuel and Ernest Jones.

“January was very tough in the U.S.,” Barnes said. “It was pretty flattish. The U.K. continued its strong momentum that it had through holiday throughout the rest of the quarter, throughout January.”

The company increased its quarterly dividend to 18 cents a share, payable on May 28 to shareholders of record on May 2. It had previously been 15 cents a share.

Shares at noon traded at $103.84, 5.6 percent above their prior close.

For the full year, net income was up 2.3 percent, to $368 million or $4.56 a diluted share, as sales rallied 5.7 percent to $4.21 billion.