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Signet Jewelers: Why Its Q1 Results Might Be Disappointing

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Jun. 4 2019, Published 8:10 a.m. ET

Signet Jewelers

Signet Jewelers (SIG) is scheduled to announce its first-quarter results before the markets open on June 6. We expect the company to post weak top and bottom-line results. We expect Signet Jewelers’ revenues to continue to decline in the first quarter, which would reflect lower same-store sales. A higher promotional environment and an anticipated decline in the number of transactions will likely drag the company’s same-store sales down. Signet Jewelers’ profit margins are expected to stay low and hurt its profitability.

Signet Jewelers’ management expects its same-store sales to fall 0.5% to 1.5% in the first quarter. The company’s management expects to report a loss.

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Signet stock is underperforming

Signet Jeweler shares have underperformed the broader markets in 2019. The shares have fallen ~40% on a YTD (year-to-date) basis as of June 3. Continued weakness in the base business, a higher promotional environment, a decline in transactions, and a projected decrease in Signet Jewelers’ earnings will likely hurt the stock.

The ongoing US-China trade war has pressured Signet Jewelers stock. Investors dumped jewelry retailer shares due to the expectation of a negative impact from retaliatory trade tariffs. Tiffany (TIF) shares also experienced a steep decline in the past month. Despite the decrease, Tiffany stock has risen 12.0% in 2019. The S&P 500 has risen 9.5% on a year-to-date basis.

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