Slowing Trends And Slowing Wedding Market Will Impact Signet Jewelers Despite Earnings Beat: Analyst

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Signet Jewelers Limited SIG with a price target of $85.

Signet's EPS for the quarter of $1.78 (versus $2.86 last year) topped the consensus estimate of $1.49. Total sales fell 9.3% to $1.67 billion for the quarter, coming in better than the consensus estimate for a 10.3% decline to $1.65 billion and the guidance range of $1.62 billion-$1.65 billion.

The analyst said that the gross margin decline for the quarter resulted from store occupancy and other fixed cost deleverages and investment in digital banners, partially offset by favorable merchandise margins in the organic banners.

SIG moderated its annual outlook as a result of a recent slowdown in trends that continued into the second quarter, including a softer than expected Mother's Day.

The moderation to the annual outlook, the analyst said, is somewhat disappointing following the introduction of better-than-feared annual guidance with the Q4 release.

Overall, the analyst remains cautious near-term given ongoing uncertainties in the

consumer spending environment as macro headwinds persist in 2023.

Also, a slowing wedding market (after a record 2022) provides an additional hurdle this year, the analyst concluded.

Price Action: SIG shares are trading lower by 9.61% at $62.84 on the last check Thursday.