Signet, historically, has performed well, with same-store sales rising in the mid- to high-single digits for six straight years after the Great Recession ended in 2009, the analysts, led by Ike Boruchow, wrote in a report.
The company was a leader when it came to market-share in the fine jewelry segment, with that number fluctuating between the low teens and high teens.
But “the company has faced more challenges the past several years,” Boruchow and his colleagues said. In fiscal 2017, those challenges resulted in the first year-on-year decline in same-store sales since the recession, followed by an even bigger decrease in 2018.
The decline totaled 5.3% in fiscal 2018 before shrinking to 0.1% in 2019, which ended Feb. 2. The analysts forecast a decrease of 0.9% in 2020 and 0.4% in 2021.
So what’s causing the trouble? “There appear to be a multitude of factors that have driven the deceleration, including e-commerce issues, credit disruptions, management turnover and diamond-swapping allegations at Kay,” the analysts wrote.
“Even more troubling in our view is that over the same period, the industry has been improving (low single digits), which has led to market share losses for this market leader.”
The analysts cut their share price target to $12 from $16. The stock traded at $18.29 Thursday, down 15.87%. It has plummeted 43% over the past year, though it has rebounded 66% from its September low.