Signet Jewelers (SIG) Stock Forecast & Price Target

Signet Jewelers has demonstrated a positive trend in its services segment, with a 7% year-over-year increase attributed to higher attachment rates of extended service agreements. Although bridal sales remained stable year-over-year in Q2, the average unit retail (AUR) growth across the company’s three largest brands indicates a healthy demand and pricing power in this important category. Furthermore, inventory levels for lab-grown fashion pieces priced below $1,000 have tripled compared to last year, signaling strong consumer interest and an optimistic outlook for the upcoming holiday season.

Signet Jewelers has faced notable challenges, particularly in its James Allen segment, which has underperformed and negatively impacted total comparable sales by 120 basis points this quarter. Additionally, fashion unit sales declined due to pressures from rising gold prices and a strategic shift away from low-priced promotional items, particularly affecting the Banter and Zales brands. Furthermore, the company's expected flat or slightly deleveraged selling, general and administrative expenses, combined with a reset of incentive compensation, suggest potential strain on profitability moving forward.