Unusual Options Activity In Signet Jewelers

Signet Jewelers Limited engages in the retail sale of diamond jewelry, watches, and other products. They are the ones that operates stores in malls and off-mall locations primarily under the Kay Jewelers, Jared The Galleria Of Jewelry, Zales Jewelers and Gordon’s Jewelers.

Last week, Signet reported their fourth-quarter earnings report. Signet reported Signet  a net loss of $116.2 million, or $2.25 a share, from a profit of $343.0, or $5.24 a share, in the same period a year ago.  Total sales declined 6% to $2.15 billion, while the 2.0% decline in same-store sales missed expectations of a 1.9% decline.

The results were due to a weak holiday season and declining foot traffic at malls.  So Signet had to increase promotions which adversely affected their profits.

And their forward guidance was just as bad.  This year, Signet sees same-store sales fallen 2.5% and at best flat.  They also announced plans to close more than 150 stores as part of its turnaround plan.

So it should be no surprise that yesterday I noticed bearish unusual options activity.  Specifically, the Smart Money bought over 3000 of the May put options with a strike price of $22 that expire in 5-6 weeks.

Part of their turnaround plan is to focus on the online business.  The chart suggests they don’t have a lot of time, but price should stall at the weekly demand at $20 and buy Signet some time.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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