Signet Group plc (ADR) (SIG)

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.