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Signet (SIG) Solid on Digital & Inspiring Brilliance Strategies

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Signet Jewelers Limited (SIG - Free Report) seems to be on a roll, thanks to solid growth in its e-commerce business and smooth progress of 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 bode well too.

Buoyed by the aforesaid endeavors, Signet reported stellar first-quarter fiscal 2023 results, wherein both the top and the bottom line beat the Zacks Consensus Estimate and improved year over year. SIG’s impressive sales performance was backed by its healthy inventory status, data-driven marketing and connected-commerce capacities. Customers’ favorable response to Signet’s assortments, especially high price point offerings, precious metals and diamonds, also drove the results.

For fiscal 2023, Signet projects total revenues in the band of $8.03-$8.25 billion, up from $7.83 billion delivered in fiscal 2022. The adjusted operating income is anticipated in the range of $921-$974 million, suggesting a rise from the $908.1 million recorded last fiscal year. Adjusted earnings per share (EPS) are envisioned in the bracket of $12.72-$13.47 in fiscal 2023, higher than $12.28 earned in fiscal 2022.

The Zacks Consensus Estimate for Signet’s sales and EPS is currently pegged at $8.23 billion and $12.47 each. These estimates suggest growth of 5.1% and 1.6%, respectively, from the year-ago period’s corresponding figures. This raises analysts’ optimism on the stock. Shares of this jewelry retailer have increased 12.8% in the past month against the industry's 6.5% decline. A VGM Score of B coupled with a projected long-term earnings growth rate of 8% for this presently Zacks Rank #1 (Strong Buy) stock further speaks volumes for its attractiveness. You can see the complete list of today’s Zacks #1 Rank stocks here.

Strategic Details

Signet is focused on enhancing its online shopping experience through in-store consultations and services like the buy online pickup in-store and curbside options. In fact, digital business is its key driver. SIG is focused on enriching its data analytics capabilities and looks forward to taking the connected commerce approach to the next phase of growth. Management has been bolstering its service offerings to widen customer relationships for a while.
Earlier, Signet had added several features and capabilities across its digital platform to offer a seamless customer experience. Management rolled out Google Business Messages and Apple Business Chat features, which allow customers to engage with virtual jewelry consultants in real time. During the first quarter of fiscal 2023, 52% of online orders leveraged its flexible fulfillment capabilities for orders fulfilled through ship from store or buy online, pick-up in store. The average order value grew above 24% in the reported quarter. Hence, SIG’s focus on evolving its channel-agnostic retailer capabilities is expected to continue aiding results ahead.

In addition, Signet’s Inspiring Brilliance strategy continues yielding and fueling market share growth. The Inspiring Brilliance strategy focuses on expanding big banners, boosting service revenues, broadening the Accessible Luxury and Value segments, as well as accelerating digital commerce, among others. As part of the Inspiring Brilliance strategy, SIG makes use of data-driven insights into targeting new and existing customers. SIG’s acquisition of Diamonds Direct, a company known for unique bridal-focused collections, appears encouraging.

All in all, given the above-discussed factors, Signet is well poised for growth in the future.

More Solid Picks in Retail

Some other stocks worth considering in the broader Retail sector that investors can consider are Boot Barn Holdings (BOOT - Free Report) , Capri Holdings (CPRI - Free Report) and Fastenal (FAST - Free Report) .

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, presently has a Zacks Rank of 1. BOOT has an expected EPS growth rate of 20% for three-five years.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 17% and 4.4%, respectively, from the year-ago corresponding figures. BOOT has a trailing four-quarter earnings surprise of 25.2%, on average.

Capri Holdings, which offers accessories and footwear, carries a Zacks Rank #2 (Buy) at present. CPRI has an expected EPS growth rate of 11.3% for three-five years.

The Zacks Consensus Estimate for Capri Holdings’ current financial-year sales and EPS suggests growth of 5.3% and 10%, respectively, from the year-ago corresponding figures. CPRI has a trailing four-quarter earnings surprise of 49.3%, on average.

Fastenal, a national wholesale distributor of industrial and construction supplies, currently has a Zacks Rank #2. FAST has a trailing four-quarter earnings surprise of 5%, on average.

The Zacks Consensus Estimate for Fastenal's current financial-year sales and earnings per share suggests growth of 15.4% and 16.3%, respectively, from the corresponding year-ago period’s numbers. FAST has an expected EPS growth rate of 9% for three-five years.