The coronavirus pandemic-induced altered shopping habits have propelled e-commerce to a new high. Well-known jewelry retailer — Signet Jewelers Limited SIG — is boasting strong growth in its digital platform. The trend was well showcased in the company’s third-quarter fiscal 2021 results. The ‘Signet Path to Brilliance’ strategy also played an important role in boosting the company’s omni-channel capabilities and drive overall efficiency. We expect these upsides to continue favoring the company in the forthcoming periods as well.
Markedly, this Zacks Rank #3 (Hold) company’s shares have surged 44.3% in the past three months compared with the industry’s rally of 17.4%. That said, let’s take a closer look at the factors that are acting as aces in Signet’s stack.
Strong E-commerce Presence
Signet is boosting online shopping experience with advanced virtual and digitally native experiences. During third-quarter fiscal 2021, e-commerce sales skyrocketed 71.4% from the prior-year quarter’s level and contributed 18.4% to the company’s total sales. The upside was driven by the company’s continued efforts to bolster omni-channel capabilities.
Markedly, the company’s investment in virtual selling is aiding higher levels of conversion in digital and retail foot traffic. Such efforts are enabling store staff to cater to customers via technology such as chat, video, social media and virtual private consultations. Signet empowered more than 20,000 store associates to engage with customers via virtual selling.
To further support growth in the digital arena, the company is broadening online assortments alongside search and browse capabilities. It is also enhancing payment options available for customers across its digital platform. Management highlights that its superior digital and analytics capabilities are helping drive its omni-channel strategy, resulting in growth across channels. In fact, the company prides on being one of the leading data-driven omni-channel retailers in the jewelry industry.
On Track With Path to Brilliance
The Path to Brilliance strategic initiative comprises focusing on customer-centric growth actions, enhancing efficiency across e-commerce and driving cost effectiveness. The initiative includes the customer-first approach, per which the company strives to build brands that meet consumers’ needs more effectively. Accordingly, the company plans to continue providing customers with improved merchandise selections. It has updated the jewelry assortment to resonate with customers’ preferences via refreshing core items, launching products, and advancing customization options.
In the context of Signet's commitment to a culture of agility and efficiency, it is generating structural cost savings and working-capital improvements. Being in the third year of Path to Brilliance initiative, the company anticipates net savings of at least $285 million compared with its original target of $225 million. It has already accomplished $185-million net cost savings over the first two years of Path to Brilliance. As stated earlier, the company projects a minimum of $100 million of structural cost savings in fiscal 2021. The savings are likely to include workforce reductions, direct sourcing, store operating and inventory-related costs, indirect spend as well as occupancy costs.
Can Efforts Help Ease Pandemic-Led Challenges?
We note that the company’s same-store sales for the Thanksgiving weekend through Monday declined low single digits owing to dismal retail store traffic trends. Management expects that same-store sales could be hurt in the forthcoming periods owing to soft retail store traffic trends and social-distancing capacity constraints.
Despite a choppy brick and mortar sales picture, we expect Signet — which shares space with Tiffany & Co. TIF — to keep gaining from strong footing in the e-commerce realm. Moreover, the company is undertaking prudent measures to optimize its store fleet by shifting to off mall locations. Also, it’s Path to Brilliance strategies are likely to keep yielding, thereby positioning the company for growth in 2021.
Other Hot Retail Stocks to Consider
Capri Holdings Limited CPRI, flaunting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tapestry, Inc. TPR, also flaunting a Zacks Rank #1, has a long-term earnings growth rate of 11.7%.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Tiffany & Co. (TIF) : Free Stock Analysis Report
Signet Jewelers Limited (SIG) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
Capri Holdings Limited (CPRI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research