10:40 AM EST, 01/14/2025 (MT Newswires) -- Signet Jewelers ( SIG ) slashed its fiscal fourth-quarter sales outlook as more customers opted for lower-priced fashion gift options than anticipated during the key holiday season, sending the company's shares sharply lower in Tuesday trading.

The owner of store chains including Kay Jewelers and Zales now anticipates sales to come in between $2.32 billion and $2.34 billion for the fourth quarter, down from its prior guidance of $2.38 billion to $2.46 billion. The current consensus on FactSet is for sales of $2.42 billion. Shares of the company dropped 19% intraday Tuesday.

Same-store sales for the three-month period are forecast to decline by 2% to 2.5%, compared with the previous forecast range of flat to up 3%. Three analysts polled by FactSet expect same-store sales growth of 1.7%. Adjusted operating income is expected between $337 million to $347 million, versus the prior guidance of $397 million to $427 million. Adjusted earnings before interest, taxes, depreciation and amortization is seen in the range of $381 million to $391 million, compared with the previous guidance of $441 million to $471 million.

For the 10-week period through Jan. 11, the company's same-store sales decreased roughly 2% year over year, reflecting peak selling days ahead of Christmas that missed expectations, Chief Financial Officer Joan Hilson said in a statement. Merchandise average unit retail, which reflects same-store sales revenue divided by same-store sales units, inclined about 5% on lower traffic and conversion, according to Signet.

"Fashion gifting underperformed as consumers gravitated to lower price points even more than anticipated in a continued competitive environment," Hilson said. "Merchandise assortment gaps at key gifting price points impeded our ability to meet that trend."

The company's merchandise margin rose less than expected due to lower fashion mix and a "stronger" response by consumers to its promotional items, according to Hilson. Engagement and service sales were in line with expectations, while the group logged average unit retail gains in bridal and fashion, the CFO added.

Last month, Signet reported third-quarter revenue of $1.35 billion, down from $1.39 billion a year ago. Same-store sales declined 0.7%.

"While there were positives in the underlying business performance during Holiday, I believe we have the opportunity to reshape our customer facing strategies in the areas of marketing, product design, and assortment innovation," Chief Executive J.K. Symancyk said in the Tuesday statement. "I see meaningful potential to unlock shareholder value through the strength of both our brand portfolio and financial foundation."

Price: 59.86, Change: -14.19, Percent Change: -19.16