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Signet Jewelers Idea Proposal (SIG)

Signet Jewelers Idea Proposal (SIG)
 

Will Signet Jewelers overcome industry deceleration to excel this holiday season?

Report Available: December 14, 2016

 

Blueshift’s initial research shows SIG rebounding this fall after a poor second quarter that was affected by accusations of fake diamond swapping. As half of SIG’s business falls into the bridal category, Millennials’ unconventional approach to diamonds is seen as a threat. But holiday sales may again be buoyed by the Ever Us collection and corresponding marketing campaign.

 

Observations

  1. SIG reported better-than-expected Q3 earnings and projected an optimistic outlook for holiday sales. Same-store sales fell 2% as Jared stores underperformed and various collections like watches were slow. But it was still better than the 4% same-store sales decline analysts predicted. SIG’s Q3 performance is a turnaround from a disappointing Q2 where results missed expectations, same-store sales fell 2.3%, and its forecast was lowered.
  2. Earlier this year, SIG’s Kay Jewelers was accused of swapping real diamonds for fake ones during inspections and cleanings. The overhang from these accusations affected the company’s reputation and was thought be in part responsible for the poor performance in Q2. As a result, SIG announced plans to test gem authenticity technology that will keep track of each gem’s unique markings and offer assurances and transparency to rebuild consumer trust.
  3. SIG also has to overcome the trend of millennials no longer interested in traditional diamond jewelry. They are looking for more unique pieces, are increasingly price conscious, and value sustainability and ethical production. This means more gemstone engagement rings, as well as rising popularity of synthetic diamonds. One estimate predicts worldwide retail sales of diamonds will grow 2% this year, down from 7% compound annual growth rate from 2009 to 2014. About 50% of SIG’s sales are related to the bridal category and the company does not carry synthetics.
  4. The Ever Us collection is in its second year and achieved strong year-to-year sales increases in Q3, marketed as a gift product, backed by a strong marketing campaign to drive holiday sales. It began selling in October 2015 and was credited with playing a major role in SIG achieving a 5% same-store sales increase in November and December a year ago. SIG’s CEO said industry trends have proven that the second year of a collection typically brings consistently improved sales, so expectations are high for this holiday season.

 

Is industry deceleration structural or temporary? How is business for independent jewelers? How are holiday sales? How is the addition of Zales affecting buying power for SIG? What affect is the diamond swapping controversy having on SIG now? How are price and inventory? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Kay, Zales and Jared personnel, Independent jewelers personnel, and Industry specialists.

 

Companies: Signet Jewelers Ltd. (SIG)

 

Research Begins: Nov. 28, 2016