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Signet's Stock Price Increases on Growth & Cost-Saving Initiatives
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Signet Jewelers Limited (SIG - Free Report) is implementing cost-saving measures, enhancing digital platforms, optimizing fleet performance and introducing innovative products to navigate a challenging market. Despite downturns in certain segments, particularly in North America and international markets, Signet's proactive strategies, including its partnership with De Beers, position the company for continued success.
By focusing on operational efficiency and leveraging data-driven strategies, Signet aims to sustain profitability and growth in an uncertain economic environment. These efforts have led to a 7% increase in the company's shares over the past year, outperforming the industry’s 6.7% decline.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $84.10 as of Aug. 30, the SIG stock is inching toward its 52-week high of $112.06 attained on June 3, 2024.
Technical indicators are supportive of Signet’s strong performance. The stock is trading above its 50-day moving average, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in SIG’s financial health and prospects. The stock currently has a Value Score of B, further validating its appeal.
Image Source: Zacks Investment Research
SIG’s Strategic Moves to Drive Growth
Signet's cost-saving initiatives target a $350-million reduction through inventory optimization, markdown management, sourcing efficiencies and technology use. In the first quarter of fiscal 2025, SIG reduced its adjusted SG&A expenses by $9 million year over year despite increased marketing spending for Mother's Day.
Enhancing the digital platform is vital for improving customer experience and boosting online sales. Signet has been using proprietary data on 17 million individuals for targeted marketing to boost bridal recovery. This data-driven strategy is expected to increase U.S. engagements by 5-10% in fiscal 2025, indicating a strong sales pipeline.
The partnership with De Beers focuses on enhancing sales team training and customer interactions by emphasizing the uniqueness of natural diamonds. Marketing efforts aim to educate consumers on the differences between natural and lab-created diamonds, strengthening Signet's market position.
The introduction of social selling capabilities for jewelry consultants is expected to triple revenue contribution in fiscal 2025, adding 0.5 points to comparable growth. Capital expenditure for fiscal 2025 is projected between $160 million and $180 million, focusing on store openings, renovations and advancements in digital and technology.
Fleet optimization has been significant, especially in the U.K., where 23 stores were closed in the first quarter of fiscal 2025, reducing overhead costs for the Ernest Jones banner. The company also improved inventory management by clearing less productive, lower-margin products and introducing higher-margin, more relevant merchandise.
New fashion product offerings, such as the Shy Collection at Jared and Unstoppable Love at Kay, have driven a 500-basis-point increase in fashion sales from the fourth quarter of fiscal 2024, boosting revenues and maintaining transaction values. Lab-created diamond fashion pieces and precious metal jewelry saw a 14% year-over-year revenue increase. Additionally, the loyalty program expansion increased active loyalty members by 20 points in the first quarter of fiscal 2025, with the total membership growing 25% since fiscal 2024.
SIG’s North America & International Units Act as Key Hurdle
Despite the overall positive performance, this Zacks Rank #3 (Hold) company has faced significant challenges in its North America and international units. North America sales declined 9% year over year to $1.4 billion in the first quarter, with a 1.6% drop in average transaction value (ATV) and a decrease in the transaction volume, leading to a 9.2% drop in same-store sales. International sales fell 17% year over year to $77.2 million due to a 15.3% reduction in ATV following the sale of prestige watch stores and fewer transactions, resulting in a 3.2% decline in same-store sales.
Driven by the uncertain macroeconomic environment, the company anticipates total sales of $1.46-$1.52 billion for second-quarter fiscal 2025, suggesting a dip from the $1.61 billion reported in second-quarter fiscal 2024. For fiscal 2025, total sales are expected to be $6.66-$7.02 billion, indicating a decline from the $7.17 billion recorded in fiscal 2024. Signet's cost-reduction efforts and enhanced operational efficiency are expected to help mitigate these challenges.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 8.9% and 10.7%, respectively, from the fiscal 2023 reported figure. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It has a Zacks Rank #2 (Buy) at present. DECK delivered a 25.9% earnings surprise in the last reported quarter.
The consensus estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 8.4% and 11.5%, respectively, from the fiscal 2024 reported levels. DECK has a trailing four-quarter average earnings surprise of 47.2%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
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Signet's Stock Price Increases on Growth & Cost-Saving Initiatives
Signet Jewelers Limited (SIG - Free Report) is implementing cost-saving measures, enhancing digital platforms, optimizing fleet performance and introducing innovative products to navigate a challenging market. Despite downturns in certain segments, particularly in North America and international markets, Signet's proactive strategies, including its partnership with De Beers, position the company for continued success.
By focusing on operational efficiency and leveraging data-driven strategies, Signet aims to sustain profitability and growth in an uncertain economic environment. These efforts have led to a 7% increase in the company's shares over the past year, outperforming the industry’s 6.7% decline.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $84.10 as of Aug. 30, the SIG stock is inching toward its 52-week high of $112.06 attained on June 3, 2024.
Technical indicators are supportive of Signet’s strong performance. The stock is trading above its 50-day moving average, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in SIG’s financial health and prospects. The stock currently has a Value Score of B, further validating its appeal.
Image Source: Zacks Investment Research
SIG’s Strategic Moves to Drive Growth
Signet's cost-saving initiatives target a $350-million reduction through inventory optimization, markdown management, sourcing efficiencies and technology use. In the first quarter of fiscal 2025, SIG reduced its adjusted SG&A expenses by $9 million year over year despite increased marketing spending for Mother's Day.
Enhancing the digital platform is vital for improving customer experience and boosting online sales. Signet has been using proprietary data on 17 million individuals for targeted marketing to boost bridal recovery. This data-driven strategy is expected to increase U.S. engagements by 5-10% in fiscal 2025, indicating a strong sales pipeline.
The partnership with De Beers focuses on enhancing sales team training and customer interactions by emphasizing the uniqueness of natural diamonds. Marketing efforts aim to educate consumers on the differences between natural and lab-created diamonds, strengthening Signet's market position.
The introduction of social selling capabilities for jewelry consultants is expected to triple revenue contribution in fiscal 2025, adding 0.5 points to comparable growth. Capital expenditure for fiscal 2025 is projected between $160 million and $180 million, focusing on store openings, renovations and advancements in digital and technology.
Fleet optimization has been significant, especially in the U.K., where 23 stores were closed in the first quarter of fiscal 2025, reducing overhead costs for the Ernest Jones banner. The company also improved inventory management by clearing less productive, lower-margin products and introducing higher-margin, more relevant merchandise.
New fashion product offerings, such as the Shy Collection at Jared and Unstoppable Love at Kay, have driven a 500-basis-point increase in fashion sales from the fourth quarter of fiscal 2024, boosting revenues and maintaining transaction values. Lab-created diamond fashion pieces and precious metal jewelry saw a 14% year-over-year revenue increase. Additionally, the loyalty program expansion increased active loyalty members by 20 points in the first quarter of fiscal 2025, with the total membership growing 25% since fiscal 2024.
SIG’s North America & International Units Act as Key Hurdle
Despite the overall positive performance, this Zacks Rank #3 (Hold) company has faced significant challenges in its North America and international units. North America sales declined 9% year over year to $1.4 billion in the first quarter, with a 1.6% drop in average transaction value (ATV) and a decrease in the transaction volume, leading to a 9.2% drop in same-store sales. International sales fell 17% year over year to $77.2 million due to a 15.3% reduction in ATV following the sale of prestige watch stores and fewer transactions, resulting in a 3.2% decline in same-store sales.
Driven by the uncertain macroeconomic environment, the company anticipates total sales of $1.46-$1.52 billion for second-quarter fiscal 2025, suggesting a dip from the $1.61 billion reported in second-quarter fiscal 2024. For fiscal 2025, total sales are expected to be $6.66-$7.02 billion, indicating a decline from the $7.17 billion recorded in fiscal 2024. Signet's cost-reduction efforts and enhanced operational efficiency are expected to help mitigate these challenges.
Stocks to Consider
Some better-ranked stocks are Boot Barn Holdings, Inc. (BOOT - Free Report) , Deckers Outdoor Corporation (DECK - Free Report) and Steven Madden, Ltd. (SHOO - Free Report) .
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 8.9% and 10.7%, respectively, from the fiscal 2023 reported figure. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It has a Zacks Rank #2 (Buy) at present. DECK delivered a 25.9% earnings surprise in the last reported quarter.
The consensus estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 8.4% and 11.5%, respectively, from the fiscal 2024 reported levels. DECK has a trailing four-quarter average earnings surprise of 47.2%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.