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Why We Don’t Expect Too Many Surprises from Signet’s Q4 Results

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Signet Jewelers is expected to post weak quarterly results

Signet Jewelers (SIG) is expected to report weak fourth-quarter results on April 3. We don’t expect too many surprises in the fourth quarter, as the jeweler’s sluggish holiday sales and guidance cut indicate that the company’s sales and earnings are likely to register a decline.

Signet Jeweler’s holiday sales fell short of expectations as the higher promotional environment and increased credit costs remained a drag. Heightened competition negatively impacted traffic, and in turn, its comps, which decreased by 1.3%. However, new products, omnichannel offerings, and digital marketing supported the top line.

The underperformance during the key sales driving season led management to lower the full-year sales and earnings forecast, which indicates higher pressure on the fourth quarter.  Signet’s same-store sales or comps are now expected to stay flat in fiscal 2019. Earlier, management expected its comps to remain flat or rise by 1%. Meanwhile, total sales are projected to be between $6.24 billion–$6.26 billion. Previously, management expected full-year sales to be in the range of $6.26 billion–$6.31 billion.

Signet’s adjusted earnings are anticipated to be $3.53–$3.69 per share. Earlier, adjusted EPS were projected to be in the range of $4.15–$4.40.

SIG stock performance   

Signet Jewelers stock has underperformed the broader markets so far this year as weak holiday sales and a lower outlook weighed on its stock. SIG stock is down 16.7% on a YTD basis as of March 22. In comparison, Tiffany (TIF) is up 28.2% during the same period. The S&P 500 has gained 11.7% on a YTD basis.

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