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Signet Up More Than 65% in 6 Months on Path to Brilliance Plan

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Shares of Signet Jewelers Limited (SIG - Free Report) have outperformed the industry in the past six months. Evidently, the stock has surged roughly 68.4% in the said time frame, significantly outperforming the Zacks Retail-Jewelry industry’s growth of 31.3%. Also, this Zacks Rank #1 (Strong Buy) stock has comfortably outpaced the broader Retail-Wholesale sector's rally of 15.8%.

 



Signet remains on track with its three-year Path to Brilliance plan, which is expected to drive growth in the long run. Apart from this, the company has been gaining from its solid position in the jewelry market along with sturdy presence in omnichannel.

Signet’s Path to Brilliance Plan

Signet’s Path to Brilliance plan, which was announced in March 2018, has been designed to augment cost savings, engage in customer-centric growth and bolster e-commerce. In sync with the company’s customer-first approach, it introduced improved feedback systems across its stores during the second quarter of fiscal 2019. Additionally, the company proceeds with efforts to differentiate its banners and launching collections.

Notably, the most vital aspect of this three-year plan is cost containment. 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, management expects to generate $200-$225 million of net cost savings over the next three fiscals, with pre-tax charges expected to be $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.

Other Endeavors

The company is also making efforts in the e-commerce space. Through the acquisition of R2Net (in September 2017), which owns popular online jewelry retailers, JamesAllen.com and Segoma Imaging Technologies, Signet has been able to combine the retail jewelry business with R2Net’s solid digital operations. Going ahead, management plans to utilize the digital innovation capabilities of R2Net to come up with innovative offerings. This move is in sync with Signet’s omnichannel transformation.

Further, the company is focused on its e-commerce division to achieve 15% of total sales in fiscal 2021, up from 8% in fiscal 2018. In the second quarter of fiscal 2019, e-commerce sales accounted for almost 10.6% of total sales, up from 10% recorded in the first quarter. Both traffic and average order value witnessed growth in the first half of the fiscal.

Moving ahead, the company intends to enhance customers' online shopping experience. In doing so, the company will make it easy for customers to sign into Kay, Zales and Jared websites by using Google and Facebook credentials. Moreover, encouraged by sturdy mobile traffic witnessed in the first half of 2019, management highlighted plans to make more investments in this area.

All said, we believe that the above-mentioned initiatives will help the company continue with its growth story.

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