Shares of Signet Jewelers Limited (NYSE: SIG) were down over 3% on Monday. The stock has dropped 12% over the past one month. The diamond jewelry retailer is set to report its fourth quarter 2023 earnings results this week. Here are a few points to note:
Revenue
Signet has guided for total sales of $2.59-2.66 billion for the fourth quarter of 2023. Analysts are projecting revenue of $2.65 billion. This compares to sales of $2.8 billion reported in the fourth quarter of 2022. In the third quarter of 2023, sales rose 3% year-over-year to $1.6 billion.
Earnings
The consensus target is for EPS of $5.43 in Q4 2023 which compares to adjusted EPS of $5.01 in Q4 2022. In Q3 2023, adjusted EPS was $0.74.
Points to note
In the third quarter of 2023, Signet’s same-store sales fell 7.6%, mainly due to shifts in consumer behavior as well as macroeconomic pressure. About half of the comp decline was attributable to lower price points. However, the company saw strong performance at higher price points, with its average transaction value in North America growing 8% in Q3.
Signet stands to benefit from the fact that jewelry is less discretionary compared to other retail categories due to its ties to special occasions thereby making it relatively resilient to inflationary pressures.
The company is doing well in the bridal segment which remains the most important one in fine jewelry, both because of its value as well as the opportunity it provides to gain loyal customers who return for future purchases. Bridal is also not cyclical, which means that engagements, weddings and anniversaries happen consistently time after time. This is yet another advantage. Signet is also focusing on services and repair offerings which provide further opportunity to drive growth.
In its Q3 report, the company said it expected some pressure from inflation and also anticipated some shift in consumer discretionary spending away from the jewelry category due to pent-up demand in experience-oriented categories. It remains to be seen how much of an impact this has had on its performance in Q4.
Click here to read the full transcript of Signet’s Q3 2023 earnings conference call