We recently published a list of Top 12 Luxury Stocks According to Hedge Funds. In this article, we are going to take a look at where Signet Jewelers Limited (NYSE:SIG) stands against other luxury stocks according to hedge funds.
The Luxury Goods Market and Consumer Behavior
According to a report by Mordor Intelligence, the luxury goods market has a size of $103.10 billion as of 2024. It is expected to grow at a compound annual growth rate (CAGR) of 7.07% and reach $145.08 billion by 2029. Similarly, a study by Global Market Insights published on Yahoo! Finance shows that the luxury packaging market was valued at $17.2 billion in 2023. It is also anticipated to grow and reach $25.8 billion by the end of 2032.
North America’s demand for luxury products is significantly high, primarily due to the region’s high disposable incomes. This is especially significant in the ongoing holiday shopping season in the US. On December 17, Simeon Siegel, BMO Capital Markets senior analyst for retail and e-commerce, appeared on CNBC to discuss the state of the consumer in the current holiday shopping season. He said that the US consumer is overly resilient. In the current scenario, the market is seeing winners grow and laggers fall behind, which is how it should be. This trend goes opposite to market dynamics in COVID-19 when every company grew. Siegel was further of the view that the consumers are still spending. For better and for worse, consumers are scared of not having something under the Christmas tree this year.
On December 10, CNBC’s Steve Liesman appeared on ‘Squawk Box’ to discuss the CNBC NRF Retail Monitor. Numbers from the Monitor corroborated Siegel’s claim and showed healthy consumer spending in November despite a shorter holiday shopping season in 2024. Non-store retailers showed a 21.5% year-over-year growth, reflecting these positive trends. Since this holiday shopping season came with lower gas prices and a deflation in the prices of goods overall, consumers had more discretionary dollars in their pockets and paid somewhat less compared to a year ago. Since luxury items fall in the category of discretionary items, these trends show positive stimulus for the industry.
We discussed consumer behavior in the ongoing holiday shopping season in a recently published article on the 7 best department store stocks to buy now. Here is an excerpt from the article:
“The holiday shopping season is in full swing in the United States. On December 2, Jessica Moulton, senior partner at McKinsey & Company, appeared on CNBC to discuss Black Friday spending and its effects on consumer sentiment. She said that while 2024 was a challenging year for retailers, the numbers rolling in from the holiday season seem promising. High hopes were especially placed on Black Friday sales, and while the numbers aren’t all in, they look pretty good. This trend holds particularly true online, where sales seem to be up by 15% or so compared to last year in many markets. According to CNBC, the total Black Friday e-commerce spending was around $10.8 billion. However, Moulton said that footfall in stores wasn’t so good, and continued to be flat year-over-year.
She said the trends in the sector are changing, with around 75% of shopping journeys starting online at the outset. Although some of them end up with consumers paying visits to the brick-and-mortar stores, much of the shopping journeys end with sales happening online. Furthermore, the retail sector is showing consumer behavior that tends to undertake a multiple retailer journey these days. If it is a bigger purchase, most consumers prefer checking out four to five retailers, either online or offline. This poses a significant change in the sector as compared to around two decades ago”.
Consumers Looking Towards Value at a Discount
On December 2, Mastercard Economics Institute chief economist Michelle Meyer appeared on CNBC to discuss industry trends and said that consumers have been geared to find value and best deals. She said that the Black Friday numbers show that consumers have been monitoring the market and gearing up to spend on the Black Friday weekend.
With inflation cooling and promotions returning, consumers are focused on finding the best deals in the market that offer value at a discount. This was one of the major motivating factors that drove considerably strong spending in e-commerce during the Black Friday weekend. Apparel, jewelry, and electronics remain the top gift sectors for the holidays, but consumers are prioritizing promotions with the greatest value instead of going ahead with brand loyalty. Meyer was of the view that consumers have the ability and the willingness to spend; they are just being savvy with their expenses by spending when promotions and deals come in.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 30 luxury stocks. We then selected the top 12 most popular stocks among elite hedge funds as of Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
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Signet Jewelers Limited (NYSE:SIG)
Number of Hedge Fund Holders: 34
Based in Bermuda, Signet Jewelers Ltd (NYSE:SIG) is a luxury retailer of diamond jewelry. It operates stores in off-mall locations and shopping malls, primarily under the Ernest Jones and H. Samuel banners. The company’s Other segment comprises subsidiaries that purchase and convert rough diamonds to polished stones.
Although the company is navigating a choppy consumer and industry environment in 2024, it is continuing to drive sales momentum. Fiscal Q3 2025 marked the sixth consecutive quarter of sequential same-store sales improvement for the company. It also has a go-to-market strategy in place for the holiday season, which is expected to drive growth for the company in fiscal Q4 2025.
Revenue for Signet Jewelers Ltd (NYSE:SIG) was $1.35 billion in fiscal Q3 2025, primarily due to same-store sales being down 0.7%. However, fashion sales were positive, as the company is seeing a strong sell-through of its new merchandise. Its strategy to focus on newness to drive higher penetration is continuing to resonate with customers, which has been up nearly 8 points in its core banners compared to last year.
The higher penetration of new merchandise is key to Signet Jewelers Ltd’s (NYSE:SIG) strategy around average transaction value (ATV) and merchandise margin. For instance, its North American fashion ATV was up mid-single digits in fiscal Q3 2025, driven primarily by a more than 30% growth in lab-created diamond fashion sales.
Overall, SIG ranks 7th on our list of luxury stocks according to hedge funds. While we acknowledge the potential of luxury stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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.