Value Line has initiated coverage of Signet Jewelers Limited (SIG) in its flagship product, The Value Line Investment Survey. Incorporated in Hamilton, Bermuda, Signet is the largest specialty retail jeweler by sales in both the United States and United Kingdom. The company’s US division operated 1,443 stores in all 50 states as of February 2, 2013. Its stores trade nationally in malls and off-mall sites as Kay Jewelers, and regionally under a number of well-established brands. Destination superstores conduct business nationwide as Jared The Galleria Of Jewelry. In addition, the jewelry titan’s UK segment operated 511 locations at February 2, 2013, including 14 stores in the Republic of Ireland and three in the Channel Islands. Its overseas arms trade in major regional shopping malls and prime ‘High Street’ locations (main shopping thoroughfares with elevated pedestrian traffic) as H.Samuel, Ernest Jones, and Leslie Davis.
Jewelry retailing is highly fragmented and fiercely competitive. Thus, Signet competes primarily against other specialty jewelers, as well as other retailers that sell jewelry including department stores, discount stores, apparel outlets, and internet retailers. Moreover, the jewelry category vies for customers’ share-of-wallet with other consumer sectors such as electronics, clothing and furniture, as well as travel and restaurants. This battle for individuals’ discretionary spending is particularly relevant to gift giving, but less so with regard to bridal jewelry (e.g. engagement, wedding, and anniversary). The company has numerous competitive strengths. Among them are a greatly diversified global brand and store chain, a strong balance sheet that allows for sizable investment opportunities, in-house customer finance programs, experienced and skilled sales staff, and well-funded and recognizable marketing and advertising promotions.
Overall, this stock has performed quite well during the last 12 months. Indeed, shares of SIG have increased around 45%, while the benchmark S&P 500 Index has climbed just 22% in that same span. It appears a string of strong quarterly results, coupled with investors’ optimism for Signet’s prospects, have pushed this equity’s price higher.
Looking ahead, the company seems well-positioned to take advantage of a new slate of products, a revamped worldwide advertising campaign, and leading market share across the United States and Europe. Its investments throughout Africa and India ought to allow Signet to shore-up its diamond supply chain in future quarters, as well. Too, a gradually recovering economy should lead to improved operating conditions, better employment statistics, and hgher levels of consumer spending, all of which augur well for SIG in the coming months. The upcoming holiday season will be key, as it should signal what lies ahead for the jewelry retail giant.
All told, subscribers interested in this specialty jewelry provider are advised to consult Value Line’s quarterly reports for Signet Jewelers Limited, as well as any supplemental reports and relevant articles as important news items arise.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.