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$14.70 -0.75 (-4.85%)
10/10/2008 4:04 PM

Signet Jewelers Limited (SIG)

CAPS Rating:
**

A specialty retail jeweler engaged in the sale of jewelry, watches and gifts that operates stores in the United Kingdom and United States.

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Avatar NetscribeRetail (80.57) Submitted: 1/22/07 7:07 AM : Outperform Start Price: $44.22 SIG Score: -28.62

Signet Group is specialty retailer of jewelry, watches and gifts. The Group operates 1,290 stores in the US where the company trades as Kay Jewelers, Jared The Galleria Of Jewelry and under a number of regional names. They also have 585 stores in UK under the name H.Samuel, Ernest Jones and Leslie Davis stores, with over 75% of the revenues coming from the US operations.

Jewelry market in US has grown at a CAGR of over 5.5% over the last 25 years. The US market accounts for about half of the worldwide jewelry sales and the sector sales have outpaced the average retail industry sales as per the US Department of Commerce. Also, diamond segment, which account for over 55% of the entire market, is growing at a very rapid pace. This signifies a good scenario for Signet, which has an 8.2% market share in the highly fragmented specialty jewelry market and derives about 73% of its revenues from diamond jewelry. The year-to-date US performance has been good over 12% rise in the turnover. Both, Kay and Jared, delivered superior performance as a result of successful national advertising and merchandising initiatives to perk up the assortment.

Pleased by the performance, company is on the way to expand its presence in the off mall locations in 2007. Additionally, they plan to increase their selling space by over 8% this year. Further, the company is planning to acquire a chain of rival stores to boost its revenues. The firm would brand the new stores and many of its current 300 regional stores under the J.B. Robinson name that would target the upscale market than its Kay stores. Among the few clouds on the horizon is the tough market environment in UK due to which their UK business is making losses. However, they are reviving their business by increasing marketing spends, e-commerce initiative and expanding diamond collections. In the light of the given facts, it is believed that the stock will shine as it progresses ahead.

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Avatar NetscribeRetail (80.57) Submitted: 5/22/07 9:19 AM

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Signet Group (SIG) is riding high in the rewarding jewelry market. Fiscal 2007 revenues went up by 9.9% powered by the strong performance by Kay and Jared brand names. Buoyed by the performance of Jared brand, SIG plans to open 20 to 25 more stores in fiscal 2008, which could generate more revenues. Also, company expects to open 35 to 40 Kay more off mall locations thereby contributing to the success story.

Polished diamond account for majority of the input costs of the company and have headed northwards lately. However, salute to the global demand for diamonds as a result of which the retailers have been able to pass on the cost to the customers. SIG has increased the percentage of its diamond offerings in the total sales mix in the past few years and has further plans to enhance these offerings, which could aid their margins.

Going forward SIG has plans on the horizon to increase its store space by 8% to 10% in fiscal 2008 that could drive sales. On a flip side, company has been facing some challenges in its UK based Ernest Jones stores as the demand from luxury watch agencies has slowed down. However, the company is employing design changes in its offerings, which could gain customer traction. Additionally, considering the market trend in UK, the company is planning to invest in larger retail centers that could enliven their business prospects. In the light of these aspects, the scrip is expected to deliver good returns in the coming year.

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