The Bull Case

We believe Signet’s (NYSE: SIG) management has both short- and long-term strategies and a defined customer profile, and that the firm is well-positioned for both competition and macro headwinds. In our opinion, the current valuation for SIG stock is quite gloomy and offers a superb risk and return profile for a value investor to participate.


According to the company’s Q3 2023 transcript, the company’s priorities in this hard climate are service (such as jewelry repairs) and market share expansion. We believe the market is concerned about Signet’s long-term prospects because of factors such as the company’s growth outlook, the popularity of its service offering, the sector’s long-term outlook, e-commerce competition, and the shift in consumer spending to non-discretionary categories, which we will discuss in the risk sections that follow.

We believe that the upcoming earnings report, which is expected to be announced around mid-March 2023, will serve as a trigger for the stock to be revalued if the company displays either (1) margin improvement or (2) ongoing sales growth.


With the drop in the marriage rate, jewelry consumption is projected to peak in the long run.

Markets may be concerned about the jewelry sector’s long-term prospects.

According to CDC/NCHS data, the marriage rate has plummeted to a record low since 1900.

The following is stated in the company’s mission statement:

The aim of Signet Jewelers Limited is “Inspiring Love,” and its mission is to empower everyone to “Celebrate Life and Express Love.” The Company’s vision is to be the world’s premier jeweler by providing superior shopping and ownership experiences, seamlessly connecting with customers across channels, earning their trust, and providing superior expertise, value, products, and services to meet their lifetime jewelry needs and desires.

We believe Signet is well-positioned in the market. It is a company that sells love and admiration, two things that are always in demand and valued in today’s society.

The two sales data sets presented below support the company’s proposition. Valentine’s Day sales in the United States have climbed throughout the years, despite a decline in marriage rates.

E-commerce is Set to Supplant Brick-and-Mortar Retailers

Due to the advancement of synthetic diamond technology and the relatively low operational cost structure of e-commerce platforms, people may now acquire diamonds online and at a lower cost.

As a result, Signet, which has 2,800 physical locations, appears to be at a cost disadvantage when compared to an e-commerce pure-play.

In response to the challenges, the corporation implemented an multi-channel strategy by acquiring an e-commerce platform.

Because of the improved customer experience, management feels that ordering online and picking up in-stores could separate the company from e-commerce pure-plays.

We agree with the company because jewelry is one of the industries where customers like to receive products in person, and also because physical companies provide convenience when customers need to purchase a gift at the last minute.

Furthermore, the corporation has curtailed its presence in the low-traffic mall.

Signet effectively boosted its inventory turnover ratio to 2.3x in FY2022, up from 1.7x prior to the pandemic.

Concerns About Discretionary Spending at the Macro Level

As long as inflation remains high, people may be concerned about spending on discretionary things. Yet, we believe management is well prepared for the challenges ahead.

With the acquisition, they have created a more adaptable operational strategy to counteract the possibility of a volatile market.

According to management, inventory was down 2% in the quarter, excluding acquisitions, and promotion was at its lowest level in recent history.

They were also well-staffed to combat labor inflation, and their employee turnover is 17% lower than last year.

In addition, they stated in their Q32023 earnings report that, in comparison to seasonal fashion such as clothes, jewelry is more steady in value, making excess inventory less problematic.


In conclusion, we believe Signet’s management has both immediate and long-term ambitions, as well as a defined customer profile, and that the firm is well-positioned for both competition and macro headwinds.

In our opinion, the current price is quite gloomy and offers a superb risk and return profile for a value investor to participate.

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