As Signet Jewelers Ltd. continues to integrate Zales into the fold, the specialty jewelry retailer leveraged higher sales and margins to post higher profits in the second quarter.
Sales gained 15 percent to $1.4 billion from $1.2 billion in the same period last year as net income increased 7.2 percent to $62.2 million, or 78 cents a share, from $58 million, or 72 cents. On an adjusted basis relating to the Zales acquisition last year, earnings per share came in with a 19.6 gain to $1.28.
Same-store sales exceeded the company’s forecast with a 4.2 percent increase. Mark Light, chief executive officer of Signet Jewelers, said “results were driven by strong and consistent sales growth across all of our selling channels, as well as solid profitability and disciplined cost management across our organization.”
Gross margins for the quarter rose to $490.8 million, or 34.8 percent of sales, from $409 million, or 33.4 percent of sales, in the same period last year. Adjusted gross margins came in at $500.1 million. This represents 35.3 percent of adjusted sales, which compares to a gross margin rate of 34.3 percent last year.
“The increase in the adjusted gross margin rate of 100 basis points over the prior year was impacted by higher sales and favorable commodity costs,” the company said in the quarterly report. “Excluding Zales, the adjusted gross margin rate was 35.7 percent, up 90 basis points.” Gross margin dollars across each of its division showed increases.
“The integration of Zales continues to go well, and we have begun to see the benefit of net synergies positively impact our operating results,” the ceo added. “I am increasingly confident that we are on track in [the current fiscal year] to realize 20 percent of our three-year net synergy [earnings] target of $150 million to $175 million. We remain committed to maintaining profitable growth while balancing investment back into the business with shareholder distribution.”