Signet Jewelers (SIG): Headline Risk Drives Estimate Cut - Wells Fargo

Wells Fargo analyst, Ike Boruchow, cut sales and margin estimates for Signet Jewelers (NYSE: SIG), driven primarily by weaker comp results at Kay. Over the past few weeks, several media outlets have published reports of consumer complaints regarding Kay Jewelers. In order to assess the “headline risk” to Kay, we have looked at the issue from several vantage points. Specifically, we 1) surveyed over 1,000 U.S. consumers, 2) monitored the Kay Jewelers Facebook page for consumer complaints and 3) closely tracked Kay’s promotional activity QTD (details of these analyses below). While we believe the meaningful concerns voiced by bears are generally overblown, it appears highly likely that there will be a short-term impact on Kay’s results. As a result, we are lowering our Q2 Kay comp to flat (from +3%) and our 2H Kay comp to -1% (from +4%).

No change to Outperform rating or price target of $112 - $114.

For an analyst ratings summary and ratings history on Signet Jewelers click here. For more ratings news on Signet Jewelers click here.

Shares of Signet Jewelers closed at $85.47 yesterday.

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