Signet Jewelers Analyst Throws Light On Macro Uncertainties Surrounding The Holiday Season

Telsey Advisory Group analyst Dana Telsey has reiterated a Market Perform rating on the shares of Signet Jewelers Ltd SIG with a price target of $72.00.
The company reported a 2.9% growth in Q3 revenue of $1.58 billion and an adjusted EPS of $0.74, beating the estimate of $0.31.
The analyst said the upside was driven by stronger topline growth as well as better expense control, while gross margin was largely in-line for the period.
The analyst added that a lower tax rate relative to consensus benefitted EPS by ~$0.06.
Within the topline, total comparable sales fell 7.6%, including relatively balanced decreases in North America and the International business of 7.6% and 6.7%, respectively.
The gross margin contraction, the analyst said, could be attributed to occupancy cost deleverage and the impact of the lower margin bridal businesses at Diamonds Direct and Blue Nile.
Q4 sales are expected to decline in the 5%-8% range to $2.59 billion-$2.66 billion vs. $2.811 billion in 4QF22.
The analyst said while the sales guide was a touch light, likely speaking the challenges and uncertainties in the current macro-operating environment for the holiday season, the operating income outlook was stronger at $363 million - $404 million versus $411 million last year, above the prior consensus of $364 million.
The analyst maintained the Market Perform rating, given the uncertainties surrounding the health of the mass consumer heading into the holiday season.
Price Action: SIG shares are trading higher by 18.7% at $68.66 on the last check Tuesday.
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