Fitch Ratings has upgraded Signet Jewelers Limited’s and Signet Group Limited’s ratings, including their Long-Term Issuer Default Ratings to ‘BB+’ from ‘BB’. The Rating Outlook is Stable.
The upgrade reflects Fitch’s increased confidence that Signet will sustain EBITDAR leverage (capitalizing leases at 8x) below 4.0x over the medium term, with proforma EBITDAR leverage as of April 2024 around 3.5x. Although there could be some continued topline moderation in the near-term given a pullback in discretionary products spending, Fitch’s operating projections, alongside management’s evolving financial policy favoring debt reduction support expectations that Signet will sustain EBITDAR leverage below 4.0x.
Signet’s rating reflects its leading market position as a U.S. specialty jeweler with approximately 9% share of a highly fragmented industry. The ratings consider Signet’s good execution from a top-line and a margin standpoint, which support Fitch’s longer-term expectations of low single-digit revenue and EBITDA growth.
