Bank of America Securities analyst Lorraine Hutchinson reiterated a Hold rating on Signet Jewelers (SIG – Research Report) today and set a price target of $110.00.
Geoff Meacham has given his Hold rating due to a combination of factors concerning Signet Jewelers. The analyst notes that while there are signs of improvement within the industry, such as rebounding sales in lower-priced jewelry and more balanced inventory levels, there’s still a level of caution warranted. The inventory correction among independent jewelers is expected to alleviate the need for aggressive promotions, which could positively influence the sales and promotional landscape for Signet Jewelers moving forward. Despite these optimistic trends, the cautious outlook on sales and margin recovery for the fiscal year 2025 justifies maintaining a Neutral stance on the stock.
Furthermore, Signet has managed to maintain its average transaction value (ATV) amidst a climate of heightened promotions by optimizing its merchandise assortment and implementing strategic pricing. The company’s warranty attachment rates have grown due to improved employee training and enhanced offerings, particularly in bridal purchases. However, the penetration rate for lab-grown diamonds, which offer higher margins, is decelerating, and the ATV for these was flat in the fiscal year 2024. These diverse factors contribute to the analyst’s decision to set a Hold rating with a revised price objective from $95 to $110, reflecting an expansion in peer multiples.
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Signet Jewelers (SIG) Company Description:
Signet Jewelers Ltd. engages in retailing of jewelry, watches and associated services. It operates through the following business segment: North America, International segment, and Others. The North America segment operates jewelry stores in malls, mall-based kiosks and off-mall locations throughout the U.S. and Canada under national banners including Kay, Zales, Jared and Piercing Pagoda, as well as a variety of mall-based regional banners. The International segment transacts mainly in British pounds, as sales and the majority of operating expenses are incurred in that currency and its results are then translated into U.S. dollars for external reporting purposes. The Other segment consists of all non-reportable operating segments, including activities related to the direct sourcing of rough diamonds, and is aggregated with unallocated corporate administrative functions. The company was founded in 1949 and is headquartered in Hamilton, Bermuda.
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