Editor’s Note
This article highlights Signet Jewelers’ strategic pivot under new leadership, focusing on consumer engagement and operational innovation to address recent performance challenges.
[Seoul=Newspim] Reporter Kim Hyun-young = Investors in Signet Jewelers (Ticker: SIG) have also responded favorably to the restructuring plan “Grow Brand Love” by new CEO J.K. Symancyk. CEO Symancyk expressed dissatisfaction with the overall performance in the fourth quarter and the growth stagnation over the past few quarters, announcing a strategy to innovate the business.
The core of this strategy is: ① Strengthening the connection between consumers and Signet’s 11 brands, ② Expanding market share in the core wedding jewelry (engagement and wedding rings) business and in the fashion jewelry segment, and ③ Streamlining operations to reduce costs and increase efficiency. As part of this new model, Signet expects to reduce its senior leadership team by approximately 30% and achieve cost savings of $50-60 million.
In particular, the expansion into the fashion jewelry market and the restructuring could be a crucial turning point for the company’s long-term growth. To drive sales growth, CEO Symancyk aims to expand the company’s dominant share in wedding jewelry sales within the U.S. while pursuing faster growth in the fashion jewelry segment where the company has lagged. Specifically, the goal is to introduce more style- and design-centric products.
This statement indicates the intention to maintain traditional strengths like wedding jewelry while building the capability to expand presence in growth areas like fashion jewelry.
To increase Signet’s share in the fashion jewelry segment, Symancyk is introducing a different approach. He stated that Signet has centralized some aspects of how it sells and markets products, making larger bulk purchases from suppliers to expand economies of scale and lower costs. He explained that this changes a previously almost entirely decentralized system where individual brands handled these functions.
Signet has long been known as an offline retailer with a strong mall presence, but after confirming greater consumer interest outside of malls, it is making efforts to reduce its reliance on them. This is an area where cost reduction and efficiency gains are expected.
During the earnings announcement on the 19th, Joan Hilson, Signet’s Chief Operating Officer (COO) and Chief Financial Officer (CFO), stated that as part of the restructuring plan, Signet is “focused on real estate optimization and plans to relocate over 10% of its mall stores to off-mall and e-commerce channels over the next three years.” This is a practical approach that recognizes the importance of an omnichannel approach while rationalizing stores in inefficient locations.
Signet’s real estate portfolio optimization signifies more than just cost reduction. It indicates that the company is continuously contemplating how to most effectively allocate resources and optimize touchpoints with consumers.
While moving stores outside of malls may lead to higher rental costs in some areas, market experts anticipate this could be offset by increased traffic and improved consumer accessibility.
Signet’s shift in real estate strategy demonstrates its response to rapidly changing consumer preferences and the growing trend of online shopping in the jewelry retail industry. Traditionally, jewelry purchases typically involved visiting a store in person to see the product ‘with one’s own eyes.’ However, in recent years post-pandemic, as consumer trust in online jewelry purchases has increased, e-commerce has emerged as a significant sales channel in the jewelry market as well.
Through these changes, Signet is seeking ways to fundamentally restructure its business model to align with shifting consumer behavior, going beyond simple cost reduction. In the same context, Signet’s acquisition of the online brand Blue Nile is evaluated as a strategic move to keep pace with this trend.
Aggregating Wall Street’s investment opinions yields a ‘Buy’ rating. According to CNBC’s compilation, among the 7 investment banks covering Signet, 1 recommended ‘Strong Buy’, 3 recommended ‘Buy’, and 3 gave a ‘Hold’ opinion. The average target price they presented is $74.40, which is 31.33% higher than the current stock price. Wall Street’s highest target price was $89, and the lowest was $55.
On the 20th, UBS raised Signet’s target price from $85 to $89 and reaffirmed its ‘Buy’ investment opinion on the stock. In a research note, UBS told investors, “Signet is an attractive turnaround stock that has executed initiatives to improve omnichannel capabilities, strengthen bridal banner services, introduce new fashion jewelry products, and enhance the supply chain.” While expecting these factors to drive sustainable sales growth, they estimate a 5-year EPS CAGR of 9%.