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Signet (SIG) Up on Digital & Inspiring Brilliance Strategies

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·4-min read
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Signet Jewelers Limited SIG seems to be on a roll, thanks to solid growth in its e-commerce business and a smooth progress of its Inspiring Brilliance strategy. Sturdy gains from growth initiatives like unique banner value propositions, marketing efforts and advanced connected-commerce capabilities are also aiding its performance. Plus, SIG’s innovation efforts bode well.

Buoyed by the aforesaid endeavors, shares of this jewelry retailer have gained 41.9% in a year compared with the industry’s 15.4% rally. A VGM Score of A coupled with a projected long-term earnings growth rate of 8% speaks volumes for this presently Zacks Rank #2 (Buy) stock’s attractiveness.

Let’s Delve Deeper

Signet’s digital business is a key driver, bolstering its performance steadily. Management is focused on enhancing SIG’s data- analytics capabilities and its connected-commerce approach.

The connected-commerce strategy helps combining customer experiences with in-store and online capabilities as well as mobile and delivery competencies. Such efforts indicate that Signet has been focusing on evolving its channel-agnostic retailer proficiency for long.

Management added several features and capabilities to its digital platform for a seamless customer experience. It rolled out Google Business Messages and Apple Business Chat features, allowing customers to engage virtual jewelry consultants in real time or offline from search results or maps. SIG is consistently offering curbside pickup and virtual consultations, and buy online pick up in store in its several locations.

E-commerce sales jumped 8.7% year over year to $556 million in fourth-quarter fiscal 2022. Brick-and-mortar sales grew 34.6% year over year to $2.3 billion. North America segment’s e-commerce sales grew 14% year over year, while brick-and-mortar same-store sales surged 30.6%. Hence, momentum in the digital realm is likely to continue boosting the results ahead.

We note that Signet’s Inspiring Brilliance strategy has been driving the market share gains for a while. The Inspiring Brilliance strategy focuses on expanding big banners, boosting service revenues, broadening the Accessible Luxury and Value segments, and accelerating digital commerce. As part of its Inspiring Brilliance growth strategy, SIG uses data-driven insights to target the new and existing customers. SIG’s acquisition of Diamonds Direct, a company known for unique bridal-focused collections, appears encouraging as well.

Bottom Line

Going into fiscal 2023, Signet expects to keep gaining from its prudent growth efforts and consumers’ favorable response toward its assortments. For the same period, management expects total revenues of $8.03-$8.25 billion, indicating growth from $7.83 billion delivered in fiscal 2022. Adjusted operating income is anticipated in the range of $921-$974 million, suggesting a rise from $908.1 million recorded last fiscal year. Adjusted earnings per share are envisioned in the bracket of $12.28-$13.00, implying an increase from $12.28 (matching the lower end of the guided range) earned in fiscal 2022.

The Zacks Consensus Estimate for sales is currently pegged at $1.81 billion for the current fiscal year, suggesting growth of 5.2% from the last fiscal year’s reading.

Wrapping up, Signet is likely to carry on the momentum on the bourses ahead, given all the above-discussed tailwinds.

More Solid Picks in Retail

A few other top-ranked stocks in the Retail sector that investors can consider are Target TGT, Kohl's KSS and Costco COST.

General merchandise retailer Target currently has a Zacks Rank #1 (Strong Buy). TGT has an expected earnings per share (EPS) growth rate of 16.5% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the corresponding year-ago period’s levels. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.

Kohl's, an omnichannel retailer, currently carries a Zacks Rank #2 (Buy). KSS’s bottom line outperformed the Zacks Consensus Estimate by 4.8% in the last reported quarter.

The Zacks Consensus Estimate for Kohl's current financial-year sales suggests growth of 2.5% from the year-ago period’s reading. KSS has an expected EPS growth rate of 8% for three-five years.

Costco, which operates membership warehouses, carries a Zacks Rank of 2 at present. COST has a trailing four-quarter earnings surprise of 13.3%, on average.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 13.5% and 17.6%, respectively, from the corresponding year-ago period’s actuals. COST has an expected EPS growth rate of 9.1% for three-five years.


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Target Corporation (TGT) : Free Stock Analysis Report
 
Kohl's Corporation (KSS) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
Signet Jewelers Limited (SIG) : Free Stock Analysis Report
 
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