Back to top

Signet Jewelers' (SIG) R2Net Buyout to Augment Top Line

Read MoreHide Full Article

Signet Jewelers Limited (SIG - Free Report) has completed the buyout of R2Net, which owns popular online jewelry retailer, JamesAllen.com, as well as Segoma Imaging Technologies that enhances digital shopping experience. This $328 million buyout will combine Signet’s retail jewelry business with R2Net’s solid digital operations. Following the news, the company’s shares gained 3.1% yesterday. In fact, shares of this Zacks Rank #1 (Strong Buy) company have gained 21.3% in a month, outperforming the industry’s gain of 8.5%.

This move is in sync with Signet’s omni-channel transformation. The company is also focusing on building e-commerce platform as the retail landscape has been undergoing a fundamental change in recent years, with technology leaving a deep and lasting impact on the space. Online shopping dominates the space now with its effective grip steadily taking over the minds of consumers. This shift in buying behavior has forced retailers to come up with new ways to market products.

The buyout will drive Signet revenues by nearly $80-$90 million, while same store sales will be positively impacted by 130-140 basis points in fiscal 2018. However, R2Net contribution to earnings per share will be neutral in fiscal 2018. The company expects the buyout to be accretive to the company’s EPS in the first year of operations. R2Net will be an independent division under Signet.

The company is striving hard to position itself on growth trajectory. It will invest between $260 million and $275 million toward opening of new Kay off-mall stores, remodeling, information and technology advancement as well as toward augmenting distribution facilities.

The company is improving digital marketing efforts and made changes to organizational structure. Taking in to account the success attained on its Customer-First Omni-channel strategy and other endeavors, Signet earlier retained fiscal 2018 outlook.

3 Other Retail Stocks Hogging the Limelight

Other top-ranked stocks, which warrant a look in the retail sector includes Movado Group, Inc. (MOV - Free Report) , Costco Wholesale Corporation (COST - Free Report) and Burlington Stores, Inc. (BURL - Free Report) . Movado Group sports the same rank as Signet, while Costco Wholesale and Burlington Stores carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Movado Group have gained 12.2% in a month.

Costco Wholesale has an impressive long-term earnings growth rate of 9.5%.

Burlington Stores delivered an average positive earnings surprise of 22.6% in the trailing three quarters and has a long-term earnings growth rate of 16.2%.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.  

Click here for the 6 trades >>



More from Zacks Analyst Blog

You May Like