Yahoo Finance Interpreting the Buzz about Signet Jewelers’ Stock
Signet Jewelers' 3Q16 Earnings Preview: Better than Expected?
Signet Jewelers stock performance
Between February 19, 2014, when Signet Jewelers Limited (SIG) announced its agreement to acquire Zale Corporation, and November 18, 2015, Signet’s stock price rose by 50.1% to $140.59. Over the same period, Signet’s stock provided total returns of 51.8% compared to the following:
the S&P 500 Index (SPY), which saw returns of ~18%
Tiffany & Company (TIF), which saw a loss of -13.4%
Fossil Group (FOSL), which saw a loss of 70.3%
In its most recent quarter, 3Q16, Signet’s stock reached a record high of $152.27 on October 30.
Impact of acquisition
After the acquisition of Zale, Signet has a market share of ~15% of the US market, three times the size of its nearest competitor.
Signet has a good track record of integration execution of the acquisitions it makes. The company has taken initiatives in Zale stores in the form of employee training, targeted promotions, cross-selling, merchandise assortment, and discount controls. Signet has also seen benefits of synergies landing slightly faster than expected.
Discounting to customers was not managed properly at Zale, which led to over-discounting. But Signet trained Zale’s sales managers with discount control strategy to make discounting more effective. Like Signet’s Sterling division, Zale is also extending its credit facility to more customers to attract more sales.
ETF exposure
Signet is a component of the S&P 500 Index (SPY) and part of the SPDR S&P Retail ETF (XRT). It has a weight of ~1% in XRT. Signet, Tiffany, and Fossil Group all have exposure in the iShares Russell 1000 Growth ETF (IWF) and the iShares Core S&P 500 ETF (IVV). Together these companies make up 0.12% of the portfolio holdings in IWF and 0.19% of the holdings in IVV.
Now check out Market Realist’s business overview of Signet Jewelers and Specialty Retail analysis.
Browse this series on Market Realist:
