Signet Jewelers' Engagement Sales Set to Rebound In Q4: Analyst Asserts

Telsey Advisory Group analyst Dana Telsey reiterated the Market Perform rating on Signet Jewelers Limited SIG, raising the price target to $82 from $71. 

As the company begins to lap the three years since the onset of COVID-19, engagement sales are expected to start recovering towards the end of FY24, according to Telsey.

Looking ahead to the back half, SIG believes that Q3 will represent the trough for engagements, while Q4 is expected to kick off the 3-year engagement recovery period (although sales are planned down on a YoY basis), the analyst adds.

Meanwhile, the company recently reported a second-quarter FY24 sales decline of 8.1% year-on-year to $1.61 billion, beating the analyst consensus of $1.58 billion. Same-store sales were down 12% versus last year.

Overall, SIG delivered a healthy earnings beat for the second quarter driven by better-than-expected sales (though still down across geographies) and gross margin, Telsey adds.

SIG continues to see FY24 sales of $7.10 billion - $7.30 billion, against the consensus of $7.18 billion. Signet raised FY24 adjusted EPS outlook from $9.49 - $10.09 to $9.55 - $10.14, against the Street view of $9.42.

Despite the solid second quarter, Telsey sees a more conservative back half outlook owing to macro challenges and a volatile consumer spending environment, particularly for SIG's mass consumer's heightened discernment around discretionary spending.

The analyst raised FY24 EPS to $9.89, up from $9.81 previously. Telsey increased the FY25 EPS to $10.51 from $10.49 prior.

Price Action: SIG shares are trading higher by 3.79% to $77.84 on the last check Friday.