Back to top

Image: Bigstock

E-commerce Growth Glams Up Signet's (SIG) Holiday Season Sales

Read MoreHide Full Article

The diamond jewelry giant — Signet Jewelers Limited (SIG - Free Report) — continued to deliver sturdy performance even amid a challenging economic backdrop induced by the coronavirus pandemic. The company’s recently-issued holiday sales figures bear testimony to its efficient approach to business. Management highlighted that credits for same store sales growth during the holiday season (nine weeks ended Jan 2, 2021) can be mainly attributed to the company’s strong digital capabilities. Additionally, the company updated its sales view for fourth-quarter fiscal 2021.

The company, as part of its transformation strategies, is emphasizing on boosting online services. This along with prudent merchandising policies attracted new customers and boosted market share this holiday season.

Well, investors reacted positively to the company’s holiday sales announcement as shares rose 6.1%, during the trading session on Jan 14. This Zacks Rank #3 (Hold) company’s shares have surged 81.6% in the past three months compared with the industry’s rise of 73.7%. That said, let’s take a closer look at the company’s performance during the holiday period.


Holiday Sales Metrics

Signet’s preliminary total sales for the holiday season were $1.8 billion, flat year over year. Markedly, preliminary same store sales were up 5.6% year over year. Same store sales includes both physical and e-commerce sales.

E-commerce sales were the highlight of the season, surging nearly 60.8%. However, same store sales for the company’s brick-and-mortar fleet comprising of 2,866 stores were down 4.1%. As of Jan 2, 2021, the company is said to have closed 355 stores out of its planned closures for 380 stores for the fiscal.

On the basis of operating segments, North American preliminary same store sales increased 7.8%. Transactions in this region went up 4.4%, while average transaction value inched up 1.6%. The segment’s traditional mall same store sales were slightly negative while off-mall formats were positive. This aided the company's real estate optimization strategy. Additionally, e-commerce sales increased 57.5% while brick and mortar sales declined 0.8% on a same store basis. Management informed that its bridal and fashion categories witnessed double digit same store sales growth in North America. This reflects strength in the company’s core and new product assortments.

Moving to the International segment, preliminary same store sales declined 19.2% year on year. The downside was triggered by the governmental lockdowns in the U.K. However, the decline was partly offset by a 92.8% rise in e-commerce sales.

Aspects Aiding Holiday Performance

The company’s expanded digital and fulfillment capabilities were one of the key highlights during the holiday season. New capabilities include virtual selling, Buy Online Pick-up In-Store (BOPIS), Ship from Store (SFS), quick and effective customer care assistance as well as better website navigation, curation and visualization. Well, these efforts helped the company enhance conversion rates alongside boosting customers shopping experience.

Management stated that the company was successful at increasing e-commerce fulfillment capacity to five times than that of last year’s holiday season. This along with prudent relationships with distribution partners helped the company meet more than 98% of customer order on time, in North America.

Moreover, the company’s differentiated banner value propositions and ability to capture broader customer base were a significant upside. This drove positive same store sales across all US banners. Fashion growth was strong across the Zales and Piercing Pagoda brands, which attracted fashion forward gifters and self-purchasers. Also, the company witnessed strength in bridal products at the Kay brand.

Signet strives to boost its banners by broadening assortments. New product lines by the company include bridal collections such as Leo's Ideal Cut and First Light at Kay as well as Royal Asscher and Pnina Tornai at Jared. New and trendy pieces from existing brands such as Center of Me at Kay and Vera Wang at Zales are also attracting customers. These efforts along with the company’s competent marketing strategies and longer promotional offers boosted sales performance. Apart from these, the company informed that by the end of the holiday season it paid off the full balance in its ABL revolving facility.

Q4 Sales View

We note that Signet expects same store sales to be up 4-5% during the fourth quarter. Moreover, total sales are expected in the bracket of $2.10-$2.12 billion. The Zacks Consensus Estimate for fourth-quarter sales is currently pegged at $2 billion. The company’s top-line came in at $2.15 billion in the year-ago quarter. While strong e-commerce is likely to aid the top line, weakness at brick-and-mortar stores is expected to be a drag. Additionally, the company expects adjusted operating income in the range of $255 - $270 million.

Looking For Retail Stocks? Check These

Tapestry, Inc. (TPR - Free Report) , flaunting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 11.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation (DG - Free Report) , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 24.6%, on average.

Walmart Inc. (WMT - Free Report) , also with a Zacks Rank #2, has a long-term earnings growth rate of 5.5%.

Zacks Names “Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>