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Shares of Signet Jewelers Limited closed down 3% today. The stock has fallen 12% over the past month. The diamond jewelry retailer is set to report fourth-quarter 2023 results this week. Here are some points to note:
results
Signet has guided for total sales of $2.59-2.66 billion for the fourth quarter of 2023. Analysts project 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 increased 3% year-on-year to $1.6 billion.
earnings
The consensus target is for EPS of $5.43 in Q4 2023 compared to adjusted EPS of $5.01 in Q4 2022. In Q3 2023, adjusted EPS is $0.74.
Points to note
In the third quarter of 2023, Signet’s same-store sales decreased by 7.6%, mainly due to changes in consumer behavior as well as macroeconomic pressures. About half of the comp decline was caused by a lower price point. However, the company saw strong performance at higher price points, with average transaction value in North America increasing 8% in Q3.
Signet benefits from the fact that jewelry is less discretionary compared to other retail categories because it is linked to special occasions, thus being relatively resistant to inflationary pressures.
The company is doing well in the bridal segment which remains the most important in fine jewelry, because of the price and also the opportunity to get loyal customers who return to buy in the future. Weddings are also not cyclical, which means that engagements, weddings and anniversaries happen continuously every time. This is another advantage. Signet is also focusing on service and repair offerings which provide more opportunities to drive growth.
In its Q3 report, the company said it expects some pressure from inflation and also anticipated some changes in consumer discretionary spending away from the jewelry category due to pent-up demand in the experience-oriented category. It remains to be seen how much of an impact this has on performance in Q4.
Click here to read the full transcript of Signet’s Q3 2023 earnings conference call
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