Signet Jewelers (NYSE: SIG) reported Q4 EPS of $3.63, $0.08 better than the analyst estimate of $3.55.

• Fourth quarter same store sales increased 4.9%;

Synergy Guidance Increased

In addition to the strong financial results and increasing pipeline of opportunities, Signet is increasing its synergy guidance (i.e. operating profit contribution) to a range of $225 million - $250 million from the previously expected range of $150 million - $175 million as measured cumulatively over the three year period from February 1, 2015 - January 31, 2018.

“In Fiscal 2016, we delivered $60 million in synergies, significantly exceeding the guided range of $30 million to $35 million,” said Michele Santana, Signet Chief Financial Officer. “As we enter the new fiscal year, we have clear line of sight to a material acceleration and expansion of synergies over the next two years. The incremental synergies are anticipated to come principally from gross margin and operating expense initiatives and secondarily from revenue-driving initiatives. Of the synergies remaining in the next two years, we expect to realize 70% by January-end 2017 and 30% by January-end 2018, which is faster than we initially guided.”

In Fiscal 2017, Signet expects that the synergies will be realized disproportionately in the back half of the year reflecting the cadence of how the Company’s profit tends to flow.

Capital Allocation

Signet’s strong balance sheet allows it to execute on its strategic priorities, invest in the business, and then return excess cash to shareholders while ensuring adequate liquidity and maintaining its investment grade rating. Signet plans to distribute 70% to 80% of annual free cash flow in the form of stock repurchases or dividends, assuming no other strategic uses of capital. In Fiscal 2016, Signet repurchased $130 million of its stock, within the previously stated guidance range of $100 million to $150 million.

Reflecting the Board's confidence in the strength of the business, Signet’s ability to invest in growth initiatives and the Board's commitment to building long-term shareholder value, the Board authorized a new share repurchase program of $750 million in addition to the $135 million remaining on the existing authorization. Repurchases are expected to be financed by free cash flow as well as potentially future incremental debt capacity. Under the share repurchase program, purchases can be made in the open market and through privately negotiated transactions from time to time depending on market conditions. Signet’s share repurchase program will commence this week.

In addition, the Board also approved an 18% increase in the quarterly cash dividend from $0.22 to $0.26 per share for the first quarter of Fiscal 2017.

Signet will report its complete financial results for the fourth quarter Fiscal 2016 on March 24, 2016.

For earnings history and earnings-related data on Signet Jewelers (SIG) click here.