We recently compiled a list of the Top 10 Luxury Stocks According to Analysts. In this article, we are going to take a look at where Signet Jewelers Limited (NYSE:SIG) stands against the other luxury stocks.
The luxury retail industry is facing significant challenges, with major brands like Burberry, Hugo Boss, and Gucci experiencing substantial drops in their profits. The decline in luxury sales, especially in Asia and the Americas, has been a major concern, with Burberry and Hugo Boss seeing notable decreases in their revenue. Other brands such as Richemont and Swatch have also reported significant downturns in sales, particularly in China. The overall luxury market index has seen a sharp decline, which indicates widespread struggles in the sector.
Luxury brands have traditionally relied heavily on Chinese consumers, who have contributed significantly to their growth. However, the slowing Chinese economy and a cautious consumer base have led to reduced spending on luxury goods. The economic slowdown in China is attributed to factors such as lower land sales, an aging population, and decreased exports.
Despite the challenges, some brands made significant strides such as the Italian high fashion women’s clothing and accessory brand, Miu Miu, which saw a nearly 60% growth last year and a 90% growth in the first quarter of this year. This helped its parent company, Prada Group, increase its sales as well.
The luxury market has historically bounced back from downturns, and many in the industry hope that the current challenges are temporary. However, the recent performance has reminded the sector that luxury items are not immune to economic challenges, and consumer demand can fluctuate based on economic conditions and consumer confidence. Nevertheless, luxury brands are comparatively less affected by the economic conditions as most of their purchases are made by a very small group of elite consumers. You can also read our article on Top 11 Luxury Clothing Stocks to Invest in Now, where we discussed luxury consumer behavior in detail.
Our Methodology
For this article, we made a list of nearly 20 luxury stocks with at least Moderate Buy ratings according to analysts and narrowed our list to 10 stocks with the highest average analyst price target, as of August 5. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds as of Q1 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An elegant and modern jewelry store showcasing refined diamond jewelry.
Signet Jewelers Limited (NYSE:SIG)
Average Price Target Upside as of August 5: 56.17%
Number of Hedge Fund Holders: 33
One of the top luxury stocks according to analysts, Signet Jewelers Limited (NYSE:SIG) has a market cap of $3.29 billion and is one of the world’s largest specialty retailers of diamond jewelry. The company runs around 3,600 retail stores under several renowned brands such as Kay Jewelers, Zales, Jared, and others while its luxury brands are H. Samuel, and Ernest Jones.
Signet Jewelers (NYSE:SIG) operates through three segments, North America, International, and Other. Beyond jewelry retailing, the company provides a range of services, including lifetime warranties on purchases, customization options, personalized credit solutions, and other offerings.
Signet Jewelers (NYSE:SIG) saw substantial benefits from its membership program in the first fiscal quarter of 2025, especially in its fashion segment, where loyalty’s impact is clear. By focusing on enhancing customer loyalty, the company achieved a notable 20-point increase in active members purchasing fashion items compared to last year.
The strategy not only retained existing members but also attracted new ones, including engagement ring recipients. It resulted in an over 25% increase in total membership since the end of the fiscal year 2024.
Signet Jewelers’s (NYSE:SIG) management banks on its strategy of targeted marketing that delivers personalized value based on each member’s unique preferences and shopping habits. The approach boosts customer satisfaction and supports the company’s broader goal of expanding merchandise margins.
The loyalty program was launched a few years ago and the company has rapidly grown it, as seen by a significant 25% rise in new users in Q1 alone. Additionally, active members making purchases increased by 50%, which shows the program’s effectiveness in driving engagement and sales.
In Signet Jewelers’s (NYSE:SIG) Q1 2025 earnings call, Gina Drosos, Chief Executive Officer of the company, mentioned that the company uses its consumer data platform, personalized marketing content, and messaging to precisely target customers with tailored content and messages.
This strategy enhances product visibility and appeals to individual preferences. By strengthening customer relationships and optimizing sales opportunities, the company aims to utilize its membership program as a fundamental driver of future growth. Signet Jewelers (NYSE:SIG) is well-positioned to further its position in the competitive retail jewelry market due to the company’s continued efforts of refined personalized marketing initiatives and expansion of its loyal customer base.
As per the consensus opinions of the 8 analysts that have covered Signet Jewelers (NYSE:SIG), the stock is a Moderate Buy. The average price target of $119.00 implies an upside of 56.17% to the present levels, as of August 5.
Moreover, in Q1, 33 hedge funds had investments in the stock, with positions worth $988.413 million. Select Equity Group is the top investor in the company with a stake worth $676.05 million, as of March 31.
Overall SIG ranks 2nd on our list of the best luxury stocks to buy. You can visit Top 10 Luxury Stocks According to Analysts to see the other luxury stocks that are on hedge funds’ radar. While we acknowledge the potential of SIG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SIG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.