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Signet (SIG) Strong on Digital & Inspiring Brilliance Efforts

Signet (SIG) continues to benefit from solid digital efforts. Moreover, SIG's Inspiring Brilliance growth strategy appears promising.

This story originally appeared on Zacks

Signet Jewelers Limited SIG looks quite promising on the back of its sturdy digital endeavors and other robust strategic initiatives, including Inspiring Brilliance. SIG has been reinforcing its online shopping experience for a while through in-store consultations and services like buy online pickup in-store and curbside options. To this end, management aims to combine digital with in-store experiences to gain a substantial competitive edge. Its Inspiring Brilliance strategy is aiding quarterly results and fueling market share growth.

Impressively, shares of this jewelry retailer have increased 28.7% in the past six months against the industry’s 15.6% decline. This upside is also driven by the currently Zacks Rank #1 (Strong Buy) player’s stellar third-quarter fiscal 2022 results. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Let’s Find out More

Signet’s digital commerce strategy bodes well. Digital business is the key growth driver. SIG is firmly focused on enhancing its data- analytics capabilities with higher precision. It is leveraging the analytics capability to optimize the process of adding product assortments.

SIG has been building on the trade area data with customer e-commerce trends, location data like GPS tracking and macro-level data with traffic draw, tenant adjacencies and customer demographics. Signet is offering a curbside pickup option and virtual consultations, and a buy online pick up in store facility in around 2,100 locations. During third-quarter fiscal 2022, e-commerce sales jumped 14.4% from the prior-year quarter’s level to $273.1 million.

Signet’s impressive third-quarter fiscal 2022 results were supported by advancements made under the Inspiring Brilliance strategy. This growth strategy focuses on expanding big banners, boosting service revenues, broadening the Accessible Luxury and Value segments, and accelerating digital commerce. It is working toward evolving its Customer First strategy into a consumer-inspired experience, which includes tailored merchandise assortments and expanded services, offering more innovative and personalized experiences.

The Inspiring Brilliance growth strategy also includes transformational productivity, as part of which SIG expects to achieve efficiencies in both gross margin and selling, general and administrative expenses. Signet acquired Diamonds Direct, which is known for unique bridal-focused collections. The buyout now became SIG’s highly-personalized bridal destination, offering customers valuable bridal experiences.

Q3 Performance

Driven by the aforesaid strengths, Signet reported robust third-quarter fiscal 2022 results wherein both the top and the bottom line beat the Zacks Consensus Estimate and improved year over year. Same-store sales rose 18.9% year over year with growth acceleration in October. Further, the overall jewelry category was robust in the quarter.

Signet brick-and-mortar as well as e-commerce sales were strong in the reported quarter. Margins were also robust. Consumers are responding positively to SIG’s refreshed merchandise assortment. All of SIG’s merchandise categories and banners registered growth, backed by nearly 50% increase in advertising.

Impressively, Signet raised expectations for fiscal 2022. For the same period, management expects total revenues of $7.41-$7.49 billion, indicating growth from $7.04-$7.19 billion predicted earlier. SIG now anticipates same-store sales in the range of 41-43%, implying growth from the earlier view of 35-38%. For fourth-quarter fiscal 2022, management expects revenues of $2.40-$2.48 billion. SIG expects same-store sales in the band of 6-9%.

Given all the factors discussed above, Signet is well-poised for growth and appears a lucrative investment bet.

More Solid Picks in Retail

Some other top-ranked stocks are Boot Barn Holdings BOOT, Tractor Supply Company TSCO and Target TGT.

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank of 1 at present. The stock has jumped 159.7% in the year-to-date period.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and earnings per share (EPS) suggests growth of 54.6% and 188%, respectively, from the year-ago  corresponding figures. BOOT has a trailing four-quarter earnings surprise of 35.3%, on average.

Tractor Supply Company, a rural lifestyle retailer in the United States, currently flaunts a Zacks Rank of 1. TSCO has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of TSCO have surged 58.7% year to date.

The Zacks Consensus Estimate for Tractor Supply Company’s current-year sales and EPS suggests growth of 19% and 23.9%, respectively, from the year-ago  corresponding readings. TSCO has an expected EPS growth rate of 10.2% for three-five years.

Target, a renowned omni-channel retailer, presently carries a Zacks Rank #2 (Buy). TGT has a trailing four-quarter earnings surprise of 19.7%, on average. The stock has rallied 23.3% in the year-to-date period.

The Zacks Consensus Estimate for Target’s current-year sales and EPS suggests growth of 13.9% and 40%, respectively, from the corresponding year-ago levels. TGT has an expected EPS growth rate of 14.4% for three-five years.

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