Signet Jewelers Limited SIG seems to be on a roll, thanks to solid growth in its e-commerce business and smooth progress in 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. SIG’s innovation efforts also bode well. Buoyed by the aforesaid endeavors, shares of this jewelry retailer have gained 9.3% in the past three months against the industry’s 4.3% rise.
Let’s Delve Deeper
Signet is consistently integrating its physical stores with advanced virtual experiences through data-driven in-store consultations and services like buy online, pickup in-store and curbside options. Growth in the digital realm bears testimony to the success of the company’s connected commerce strategy. The strategy helps in combining customer experiences, leveraging in-store and online as well as mobile and ubiquitous delivery.
SIG had earlier added several features and capabilities to its digital platform, offering a seamless customer experience. It had 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. All the aforesaid efforts indicate that Signet continues to focus on evolving its channel-agnostic retailer capabilities. We expect the momentum in SIG’s digital business to continue driving the overall results ahead.
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Digital business is the key driver for Signet. Management is focused on enhancing the data-analytics capabilities with higher precision. SIG is leveraging the analytics capability to optimize the process of adding product assortments. In addition, e-tags are innovative and come across as valuable technology. Such efforts indicate that Signet has been focusing on evolving its channel-agnostic retailer capabilities. This is helping the company cater to customers’ needs more aptly.
In addition, the company’s loyalty efforts bode well. Currently, the company has been witnessing more than 30% of sales from its loyalty members. The loyalty members are spending 40% more thannon-loyalty customers on average. Apart from these initiatives, management is also steadily enhancing its service offerings to widen customer relationships.
We note that Signet’s Inspiring Brilliance strategy appears encouraging. This growth strategy focuses on expanding big banners, boosting services, broadening the Accessible Luxury and Value segments, as well as accelerating digital commerce, among others. As part of the Inspiring Brilliance growth strategy, the company makes use of data-driven insights for targeting new and existing customers. It is working toward evolving its Customer First strategy to a consumer-inspired experience, which includes tailored merchandise assortments and expanded services, offering more innovative and personalized experiences.
Signet’s acquisition of Diamonds Direct USA Inc appears encouraging. Diamonds Direct is known for its unique bridal-focused collections and shopping experience. This has now become the company’s highly-personalized bridal destination, offering customers valuable bridal experiences. Signet has also been boosting customization services. The Inspiring Brilliance growth strategy also includes transformational productivity, as part of which the company expects to achieve efficiencies. Also, the company’s acquisition of Blue Nile appears encouraging. Blue Nile is the pioneer in online diamond marketplace shopping, thus enhancing the company’s portfolio and its customer base.
Signet recently posted better-than-expected results for third-quarter fiscal 2023. It reported adjusted earnings of 74 cents per share, beating the Zacks Consensus Estimate of 30 cents. The company generated total sales of $1,582.7 million, ahead of the Zacks Consensus Estimate of $1,473 million. The top line rose 2.9% from the prior-year fiscal quarter’s tally. Sales in the North American segment rose 5.1% from the year-ago fiscal quarter’s number to $1.5 billion.
Management raised the view for fiscal 2023, reflecting confidence in the current business trends and is inclusive of Blue Nile. It also remains encouraged about the holiday season. It projects total revenues in the band of $7.77-$7.84 billion, compared with $7.60-$7.70 billion projected earlier and $7.83 billion delivered in fiscal 2022. The adjusted operating income is anticipated in the range of $809-$850 million, up from the earlier projection of $787-$828 million. Adjusted earnings per share are envisioned in the bracket of $11.40-$12.00 compared with the previous forecast of $10.98-$11.57 for fiscal 2023.
On a concluding note, Signet will continue to perform well on the bourses, given the above-discussed factors. A VGM Score of A coupled with a projected long-term earnings growth rate of 8% speaks volumes for this presently Zacks Rank #1 (Strong Buy) stock’s credibility. You can see the complete list of today’s Zacks #1 Rank stocks here.
3 Top Retail Stocks
We highlighted three top-ranked stocks, namely Tecnoglass TGLS, GMS GMS and Wingstop WING.
Tecnoglass manufactures and sells architectural glass and windows, and aluminum products for the residential and commercial construction industries. TGLS currently sports a Zacks Rank of 1 .
The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and earnings per share suggests growth of 40.5% and 76.4%, respectively, from the year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
GMS, a distributor of wallboard and suspended ceiling systems, currently sports a Zacks Rank of 1. GMS has a trailing four-quarter earnings surprise of 10.8%, on average.
The Zacks Consensus Estimate for GMS’ current financial-year sales and EPS suggests growth of 10.8% and 10.2%, respectively, from the year-ago reported figures. GMS has an expected EPS growth rate of 10.7% for three-five years.
Wingstop, which franchises and operates restaurants, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 5.8%, on average.
The Zacks Consensus Estimate for Wingstop’s current financial-year sales and earnings per share suggests growth of 25.3% and 22.2%, respectively, from the year-ago reported numbers. WING has an expected EPS growth rate of 11% for three-five years.
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