04:10 PM EDT, 09/03/2024 (MT Newswires) -- Signet Jewelers' ( SIG ) revenue trends weakened in July, likely pushing fiscal second-quarter sales down more than expected, UBS Securities said in a note emailed Tuesday.

The brokerage lowered its revenue target to $1.49 billion, implying a year-over-year decline of 7.5%, from its previous view that sales would drop 6.5% to $1.51 billion. The consensus is for $1.51 billion, according to the note.

UBS continues to expect adjusted earnings per share of $1.16, which is in-line with consensus and implies an annual decline of 25%. Gross margin is expected to have advance 15 basis points year over year to 38% amid sourcing cost savings and outperformance in services revenue, the report showed.

The quarter's performance could cause the operator of Kay Jewelers, Zales and Jared to move fiscal 2025 EPS guidance toward the lower end of management's $9.90 to $11.52 range, according to a group of UBS analysts including Mauricio Serna. Shares of Signet closed 4.3% lower on Tuesday.

UBS lowered its full-year EPS target to $10.40 from the previous $10.90 forecast. The consensus is for adjusted EPS of $10.50 in the ongoing year.

The analysts' revenue growth estimate was reduced to reflect an annual decline of 5.4% at $6.79 billion, according to the report. Seven analysts surveyed by Capital IQ are expecting revenue of $6.78 billion in fiscal 2025. Signet Jewelers ( SIG ) is scheduled to report results for the second quarter on Sept. 12.

Still, Signet Jewelers ( SIG ) benefitted from a few fundamental improvements in the July quarter, according to UBS. North America comparable sales are tracking down 5% after falling 9.2% in the first quarter, the analysts wrote. Industry data checks show store visits fell 1.2% year-over-year in the calendar second quarter, an improvement from the first quarter's 5.2% decline.

"A key message is dynamics softened in July but trends have picked up in August," Serna said.

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