Signet Bucks Retail Trend - Sales & Shares On the Rise

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We rarely talk about jewelry in this space and, frankly, the only investments I have ever made in jewelry ended up on my wife’s hand, neck, or ears. However, the share price of Signet Jewelers Limited (LSE:SIG) (NYSE:SIG) was up an impressive 3.72% today on the London Exchange following release of its Q4 and year end report for FY2014. As I have said before, an increase of something like 3.72% is not necessarily impressive, but when it represents an actual increase of 222.00 pence, it begins to sparkle like a diamond, especially when the shares are trading at 6,196.00.

I feel compelled to explain to the otherwise uniformed that Signet is not the mom & pop jewelry store around the corner in the local strip mall. Signet’s corporate headquarters are in Hamilton, Bermuda. It’s operational headquarters are in London. That alone is a tell-tale clue into the Signet Story. Whilst it is not entirely clear to me at this point exactly how many named stores operate under the Signet umbrella, here is a sampling.

  • With about 320 stores in the UK, H. Samuel is the largest jewelry store chain in the UK and it targets what it describes as the middle market. Same store sales for H. Samuel were up 3.6% in FY2014 to $151.5 million.
  • Ernest Jones is the Signet upper-middle class brand in the UK, featuring finer grades of jewelry in more intimate settings. Same store sales for this brand were up 8.5%, bringing in revenues of $120.7 million.
  • Kay Jewelers is the #1 specialty retail jeweler in the US based on sales. With $805 million in sales, Kay represents more than half of Signet’s $1,564 million revenue.
  • Jared, known as “The Galleria of Jewelry,” operates out of stand-alone stores located near other large, national brand retailers. This year Jared contributed $382.7 million is sales with a 4.1% same store increase. Jared is the fourth largest jeweler in the US.
  • J B Robinson, Osterman and LeRoy’s are just a few of the regional brands operated by Signet in the US. Whilst all of the major brands’ sales increased in FY2014, the combined regional brands had a same store decline of (3.1%)

The road ahead appears to be seriously interesting from the investor side. The company is projecting another 3-4% increase in sales across the board. In addition, Signet announced last month that it is set to acquire the Zale Corporation in a deal worth $1.4 billion. Signet has offered to pay $21.00 per share, a 41% premium over Zale’s closing price on 18 February. Zales promotes itself as “the best-known name in jewelry” and is considered the leading jeweler in US regional malls.

Whether or not Signet is an appropriate investment for your portfolio, I cannot judge, but it sure is a company bent on dominating the retail jewelry business in the UK and the US. And, whilst complaints abound from nearly every sector about the economic crunch, the retail jewelry business appears to be strangely prosperous.

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