QUOTE AND NEWS
Wall Street Journal  Jan 31  Comment 
Signet Jewelers has created a new chief customer officer position and made other management changes as it works to drive growth and regain consumer confidence.
MarketWatch  Jan 31  Comment 
Signet Jewelers Ltd. announced tuesday an organizational shake up that included the retirement of its chief operations officer and the creation of new executive roles, in an effort to focus enhancing digital capabilities and improving customer...
SeekingAlpha  Jan 25  Comment 
Forbes  Jan 23  Comment 
Looking at the universe of stocks we cover at Dividend Channel, on 1/25/17, Coca-Cola Bottling Co. Consolidated (NASD: COKE), Lennar Corp. (NYSE: LEN), and Signet Jewelers Ltd (NYSE: SIG) will all trade ex-dividend for their respective upcoming...
DailyFinance  Jan 23  Comment 
Filed under: News, Crime By Jim Forsyth SAN ANTONIO, Jan 22 (Reuters) - At least one person was killed and seven others wounded during a botched robbery at a jewelry store at a San Antonio mall, police said on Sunday. The shooting unfolded...
Benzinga  Jan 20  Comment 
Northcoast Research said Signet Jewelers Ltd. (NYSE: SIG) is leaning to a sale of its credit business, a move that could potentially lift its valuation multiples and result in increased returns for shareholders. Analyst Commentary Analyst Jeff...
Wall Street Journal  Jan 20  Comment 
The Pentagon said Thursday that SIG Sauer had won a $580 million contract to supply the U.S. Army with new handguns, ending a long-running contest that had attracted fierce criticism from a senior military chief.
Benzinga  Jan 17  Comment 
On Tuesday, the Vetr crowd upgraded their rating for Signet Jewelers Ltd. (NYSE: SIG) from 4 Stars (Buy), issued five days ago, to 4.5 Stars (Strong Buy). Crowd sentiment for the stock is unanimously positive, with 100 percent of Vetr user ratings...




RELATED WIKI ARTICLES
 

Signet Group plc (NYSE: SIG) is the world's largest specialty jewelry retailer with over $3.3 billion in sales in fiscal 2010.[1] The company operates in the United Kingdom and the United States, where it owns jewelry chains such as Kay Jewelers and JB Robins Jewelers. The US Bureau of Economic Analysis (BEA) estimates that Signet has approximately 4.4% of the $58.8 billion total jewelry market.[2]

Despite being the world's largest specialty jeweler, Signet only earned a 8.3% operating margin,[1] considerably lower than some of its competitors, including Tiffany's. This is because of the relatively low price points Signet sets for its jewelry, placing it in the "affordable luxury" space. The company's goal is to provide value and pass along cost savings to shoppers, which appeals to the middle-income consumer. Signet's low gross margin is also partially because the company buys polished diamonds directly, rather than finishing rough diamonds in-house.

Signet's sales are split geographically roughly 75% and 25% between the U.S. and the U.K., respectively. This gives the company a small source of revenue from abroad, but not enough to effectively protect it from downturns in the U.S. economy. Additionally, the company is especially vulnerable in weak global economic times as consumers cut back spending on luxury items. As a result of the sluggish global economy, the company's net sales fell by 1.6% and same-store sales fell by 0.4% in 2010.[1]

Company Overview

Signet Group is a U.K. based specialty jeweler operating multiple chains of jewelry retail stores in the United Kingdom and the United States. In the U.S. Signet operates Kay Jewelers and Jared The Galleria of Jewelry as well as other regional chains such as JB Robinson Jewelers, Marks & Morgan Jewelers and Belden Jewelers. In the U.K. Signet operates H. Samuel The Jeweller, Ernest Jones The Diamond & Watch Specialist, as well as a few other regional stores. Signet is an "affordable luxury" retailer as it targets middle-income consumers by providing jewelry at lower price points than jewelers like Tiffany. Although these lower prices open up Signet's stores to a wider range of customers, it keeps Signet's profit margins low and leaves the company exposed in times of economic distress when middle-income consumers cut back on unnecessary spending.

Business Growth

FY 2010 (ended January 30, 2010)[1]

  • Net sales fell by 1.6% to $3.29 billion. Company wide, same store sales decreased by 0.4% as the weak economy slowed the demand for luxury items. Same store sales increased 0.2% in the US and fell 2.4% in the UK.
  • The company reported a net gain of $164 million an improvement over the $394 million loss the company incurred the previous year.

Trends and Forces

Global Economic Downturn Hurting "Affordable Luxury" Jewelry Sales

Because three-quarters of Signet's sales come from their U.S. operations, the company is heavily dependent upon the health of the U.S. economy and global economy. Jewelry is a luxury that consumers will avoid in times when disposable income is low, such as in times of recessions or shorter economic downturns. This is especially true of "affordable luxury" retailers such as Signet which appeal to consumers with sensitive budgets by offering jewelry at lower price points than some of their competitors (Signet's most expensive chain, Jared, has an average unit price of $747 compared with prices above $3,000 for nearly half of the jewelry sold by Tiffany). In 2010, the sluggish economy weakened the demand for Signet's products and as a result, the company's net sales fell by 1.6%.[1]

Increasing Commodities Prices Hurt Signet's Already Small Margins

As an "affordable luxury" jewelry retailer who delivers value to middle-income consumers with mid-range prices, Signet's profit margins are slim. These margins can be seriously diminished by rising prices in commodities that are inputs in jewelry such as gold, silver and other precious metals. Recent trends in the global economy, spurred by rising oil prices and the falling dollar have led to increasing prices in these precious metals which may seriously hurt Signet's gross margin.

Exchange Rates Can Help or Hurt Signet

As a quarter of its sales are derived from abroad, exchange rates can play a major role in Signet's performance. As the company doesn't engage in any significant hedging activity against exchange rate risk, the final amount of its sales and profits are greatly exposed to fluctuations in the value of the U.S. dollar. When the dollar falls against the British pound, Signet's U.K. sales become more valuable when translated back into dollars.

Competition

The jewelry market is split between a range of companies of different sizes, because jewelry-shoppers are less price sensitive than other goods and thus price is not a major factor in a purchase decision, rather important points of differentiation are quality, service and image. Thus, smaller specialized jewelers are able to compete on a store-to-store basis against larger companies such as Signet. As such Signet's competition comes from a variety of sources, including other specialty jewelry retail chains, as well as department stores with jewelry operations and small jewelry shops. Signet's largest direct competitors include Tiffany (TIF) , Zale (ZLC), and Blue Nile (NILE). Tiffany (TIF) is a leading jewelry retailer based in the U.S. but over half of its stores are located outside the United States, with strong presences in Europe and Japan. Zales specializes in diamond jewelry and operates mostly mall-based stores as well as mall kiosks only in North America. Blue Nile (NILE) is the largest online-only retailer of certified diamonds and fine jewelry. In addition to these specialty retailers Signet also faces competition from upscale and exclusive retailers such as Bulgari and Cartier.

Speciality Jewelry Retailers:

Department Stores:

References

  1. 1.0 1.1 1.2 1.3 1.4 SIG 2010 10-K "Selected Consolidated Financial Data" pg. 48
  2. SIG 2010 10-K "Competition and Sector Consolidation" pg. 3
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki