Signet Jewelers Limited SIG recently announced initiatives under the ‘Signet Path to Brilliance’ plan for the next three years. Notably, the plan primarily focuses on bringing about cost effectiveness.
A portion of the cost savings will be invested in the development of e-commerce and omnichannel capabilities along with product innovation. Under the plan announced in March, management expects to generate $200-$225 million of net cost savings over the next three fiscals with pre-tax charges expected in the range of $170-$190 million. During fiscal 2019, the company anticipates net costs savings of $85-$100 million with the rest coming in by the end of the program.
This Zacks Rank #2 (Buy) company is ramping up its digital marketing efforts. The acquisition of R2Net, which owns popular online jewelry retailer — JamesAllen.com and Segoma Imaging Technologies — merged Signet’s retail jewelry business with R2Net’s solid digital operations. This is in sync with Signet’s omnichannel transformation. Per management, omnichannel and e-commerce capabilities are a key aspect of the ‘Signet Path to Brilliance’ plan.
The Hamilton, Bermuda-based company is not only focusing on achieving double-digit growth in e-commerce but is also striving to gain 15% of total sales from it by fiscal 2021, up from 8% in fiscal 2018. In the last reported quarter of fiscal 2019, e-commerce sales were almost 10% of total sales, up 80.9% on a year-over-year basis.
Apart from this, traffic and average order value increased in the last reported quarter. The company received 7500 appointments bookings in the last reported quarter via its website, which doubled from the preceding quarter. The company is also trying to make online shopping simpler for customers. Notably, the company has expressed plans to make it easy for customers to sign into Kay, Zales and Jared websites by using Google and Facebook credentials.
Further, Signet concluded the strategic outsourcing of credit through the sale of its existing non-prime receivables and implementation of a forward flow purchase arrangement for future non-prime receivables. The company sold 70% and 30% of its existing non-prime receivables to funds managed by CarVal Investors and Castlelake, L.P., respectively, and received $445.5 million in cash proceeds. With this transaction, Signet has transitioned to a fully outsourced credit structure that helps it to focus on the core jewelry retail business and also lower its working capital requirements. The company plans to utilize the proceeds along with cash in hand to buy back shares.
In the past three months, shares of Signet have displayed a strong performance on the bourses. The stock has surged 46.3%, comfortably outperforming the
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