[2014]

Signet
Strategic Audit
ELSCA 43-E
Dr. Saneya El Galaly

[ Signet Jewelers]

Prepared by:
Andrew Adel
Mohamed Yehia
Hesham Mahmoud
Wael Abdel Sattar
Walid Zohair

ITS | Signet Jewelers Strategic Audit

Table of Contents
1.

Current Situation ............................................................................................................ 5

1.1.

Corporate Overview ................................................................................................................5

1.1.1.
1.1.2.

1.2.
1.3.
1.4.

Strategic Posture ...............................................................................................................................5

Board of directors & executives ......................................................................................................5

History and time line ............................................................................................................. 10

Products and services............................................................................................................ 10
Portfolio Analysis .................................................................................................................. 10
1.4.1.
1.4.2.

Total sales (Breakdown by division & brand) ............................................................................ 10

Operating Income (Breakdown by division) .............................................................................. 10

1.5.
1.6.

Financial Analysis .................................................................................................................. 11

Overall Financial Analysis of the Financial Statements ........................................................... 11

2.

Environmental Analysis ............................................................................................. 12

2.1.

External Environment: Opportunities and threats .................................................................. 12

2.1.1.
2.1.2.
2.1.3.
2.1.4.

2.2.

Natural Environment ..................................................................................................................... 12

PEST Analysis ................................................................................................................................. 12
Task Environment Analysis .......................................................................................................... 13
Summary of External Factors (EFAS Matrix) ............................................................................. 14

Internal Factor Analysis: Strengths and Weaknesses .............................................................. 15

2.2.1.
Strengths and Weaknesses ............................................................................................................ 15
As Signet stores trade should be in major regional shopping malls and prime High Street locations
with a luxury appearance, the high cost of opening new stores limited the expansion and penetration
of Signet stores .................................................................................................................................................. 16
2.2.2.
IFAS Matrix ..................................................................................................................................... 17

2.3.

Overall Environmental Analysis ............................................................................................. 18

2.3.1.

SFAS Matrix - Analysis of Strategic Factors................................................................................ 18

3.

Conclusion and Recommendations ............................................................................ 19

3.1.
3.2.
3.3.
3.4.

TOWS Strategic Alternatives Matrix....................................................................................... 19

Strategic alternatives ............................................................................................................ 21
Recommended Strategies...................................................................................................... 22
Implementation .................................................................................................................... 24

Strategy Implementation..................................................................................................... 24
3.4.1

Short term/Immediate strategy Implementation 1st year ................................................. 24

ITS | Signet Jewelers Strategic Audit

3.4.2
Long Term strategy Implementation 2nd to 4th year ....................................................... 24
3.5. Evaluation and Control .......................................................................................................... 24
Output Controls ............................................................................................................................... 24
Input Controls .................................................................................................................................. 24
Behavior Controls ............................................................................................................................ 24
Risk Management ............................................................................................................................ 24

ITS | Signet Jewelers Strategic Audit

1. Current Situation
1.1. Corporate Overview
1.1.1. Strategic Posture
The mission, policies, objectives, and strategies of Signet jewelers are clearly stated in their
2014 Annual Report.
Our goal is to further enhance Signets position as a leading US and UK specialty retail
jewelry retailer by helping our customers Celebrate Life and Express Love through
offering a unique customer experience and driving customer loyalty.
To accomplish our goal, we will drive our business into the future through the following
strategic priorities:

Maximize mid-market.

Best in bridal.

Best-in-class digital ecosystem.

Expand geographic footprint.

People, purpose and passion.

1.1.2. Board of directors & executives
A. The Board of Directors:
The Board's prime objective is the sustainable enhancement of business performance and
shareholder value. It is responsible for determining all major policies, ensuring that
effective strategies and management are in place, assessing performance of Signet and its
senior management, reviewing the systems of internal control and setting policy including
that relating to social, ethical and environmental matters. The Board delegates the day-today management of the Company to the Chief Executive Officer and other senior
executives of the Company, and provides oversight of management. The Board also seeks
to present to shareholders, potential investors and other interested parties a balanced and
coherent assessment of the Company's strategy, financial position and prospects. Board
members are expected to attend Board meetings and review materials relating to those
meetings in advance.
B. Board members:
1. H. Todd Stitzer, Chairman
H. Todd Stitzer, 62, Chairman, appointed to the Board in January 2012. He was, until its
acquisition by Kraft, Inc. in 2010, the Chief Executive Officer of Cadbury PLC (previously
Cadbury Schweppes Plc), having joined that company in 1983 as Assistant General
Counsel for North America, before moving into strategic planning, and marketing and
sales roles. Mr. Stitzer became CEO of Cadbury PLCs wholly owned subsidiary, Dr
Pepper/7 Up Inc., in 1997 and then of Cadbury PLC in 2003. He attended Harvard College
and Columbia University Law School and practiced as an attorney with Lord, Day & Lord.
He was a director of publicly held Diageo PLC between 2004 and June 2013 and is
currently a director of privately held Massachusetts Mutual Life Insurance Company. He is
a member of the advisory board of Hamlin Capital Management, a privately held
investment advisory firm, and is also a member of the advisory committee to the board of
Virgin Group Holdings Ltd., a privately held company. It was on the basis of his proven
leadership skills and ability to Chair the Board, that the Board concluded that Mr. Stitzer
should continue to serve on the Board.
ITS | Signet Jewelers Strategic Audit

2. Michael W. Barnes, Chief Executive Officer and Director

Michael W. Barnes, 53, Chief Executive Officer and Director, was appointed to the Board in
January 2011. Mr. Barnes joined the Company as Chief Executive Officer Designate on
December 1, 2010, and became Chief Executive Officer and a Director on January 29, 2011.
Prior to joining the Company, Mr. Barnes was President, Chief Operating Officer and a
Director of Fossil, Inc., having served in those and other executive capacities at Fossil for
twenty-five years, and as a Director of Fossil from the time it became a public company in
1993 until December 1, 2010. Mr. Barnes also serves on the Board of Darden Restaurants
Inc. As Chief Executive Officer, he has extensive knowledge of Signets operations. In
addition, Mr. Barnes has a broad retail skill set and substantial leadership experience, with
responsibilities ranging from overseeing state-of-the-art international sourcing and supply
chain operations to leading business development and managing relationships with retail
and licensing/brand partners. The Board has concluded that Mr. Barnes should continue to
serve on the Board for these reasons.
3. Virginia C. Drosos, Director
Virginia C. "Gina" Drosos, 51, Director, appointed to the Board in July 2012. Ms. Drosos is
President of Assurex Health, a personalized medicine company. Prior to this was a Group
President of the Procter & Gamble Company, one of the worlds leading manufacturers of
branded consumer packaged goods, until her retirement in September 2012. During her 25
year career at Procter & Gamble, Ms. Drosos held positions of increasing responsibility, in
her role as Group President, Ms. Drosos had responsibility for a $6 billion business unit
operations, P&L, strategy, innovation and long-term business development. Ms. Drosos is
also a Director of American Financial Group, a holding company engaged primarily in
property and casualty insurance through the operations of Great American Insurance. Ms.
Drosos brings valuable skills and insights to the Company. She has expertise in branding,
marketing, global operations and business expansions into new geographies. The Board
has concluded that Ms. Drosos should continue to serve on the Board for these reasons.
4. Dale W. Hilpert, Director
Dale W. Hilpert, 71, Director, appointed to the Board in September 2003. Mr. Hilpert serves
on the Board of ANN INC. He was Chief Executive Officer of Williams-Sonoma, Inc. from
April 2001 until his retirement in January 2003. Prior to this he was Chairman and Chief
Executive Officer of Foot Locker, Inc. which he joined as President and Chief Operating
Officer in 1995. Mr. Hilpert was asked to join the Board in order that it might benefit from
his general management and retail specific skills. The Board has concluded that Mr. Hilpert
should continue to serve on the Board for these reasons.
5. Helen E. McCluskey, Director
Helen E. McCluskey, 58, Director, appointed to the Board in August 2013. Ms. McCluskey
was President and CEO of Warnaco Group, Inc until its 2013 acquisition by PVH
Corporation. Ms. McCluskey joined Warnaco as Group President, Intimate Apparel in
2004, and her responsibilities continued to increase, becoming Chief Operating Officer in
2010, and President and Chief Executive Officer in 2012. Prior to joining Warnaco, Ms.
McCluskey held various positions of increasing responsibility with Firestone Tire &
Rubber Company (1977-1983), Playtex Apparel, Inc (1983-2001) (which was acquired by
Sara Lee Corporation in 1991) and Liz Claiborne Inc. (now Fifth & Pacific Companies Inc.)
(2001-2004). Ms. McCluskey serves as an independent director of PVH Corporation, which
position she assumed following the merger with Warnaco in 2013. With Ms. McCluskey's
broad background in strategy, business planning and operations, she brings valuable skills
ITS | Signet Jewelers Strategic Audit

and insight to the Company. The Board has concluded that Ms. McCluskey should
continue to serve on the Board for these reasons.
6. Marianne Miller Parrs, Director
Marianne Miller Parrs, 70, Director, appointed to the Board in October 2008. Ms. Parrs also
serves on the boards of Stanley Black & Decker, Inc. (previously The Stanley Works Inc.)
and CIT Group Inc. Ms. Parrs retired in 2007 as Executive Vice President and Chief
Financial Officer of International Paper Company where she had been since joining in 1974
as a Pension Trust Investment Manager and holding a number of positions before first
being appointed Senior Vice President and Chief Financial Officer in 1995. She held this
position until 1999 when she was appointed Executive Vice President with responsibility
for Information Technology, Global Sourcing, Global Supply Chain and Investor Relations.
She held this role for six years and she was also reappointed Chief Financial Officer in
2005. Previously Ms. Parrs was a Security Analyst at a number of firms including Merrill
Lynch. The Board considered it necessary to recruit to the Board a director with substantial
US financial reporting experience. The Board has concluded that Ms. Parrs should continue
to serve on the Board for these reasons.
7. Thomas G. Plaskett, Director
Thomas Plaskett, 70, Director, appointed to the Board in October 2008. Since 1991, Mr.
Plaskett has been Chairman of Fox Run Capital Associates, a private consulting firm
focusing on financial advisory and corporate governance services for emerging companies.
From 1999 until 2000 he served as the Chairman, President and Chief Executive Officer of
Probex Corp, an energy technology company. He also served as Vice Chairman of Legend
Airlines, from 1997 until 2001. Mr. Plaskett served as Interim President, Chief Executive
Officer, and Acting Chief Financial Officer of Greyhound Lines for two years before
becoming Chairman from 1995 until 1999, when the company was sold. Previously, he was
Chairman, President and Chief Executive Officer of Pan Am Corporation from 1988 until
1991. Prior to that, Mr. Plaskett was President and Chief Executive Officer of Continental
Airlines from 1986 to 1987. Mr. Plaskett also held several senior management positions at
American Airlines and AMR Company between 1974 and 1986. Mr. Plaskett served as a
director of Novell Corporation, Alcon Laboratories, Inc., and RadioShack Corporation until
April 2010, May 2011, and November 2013 respectively. Mr. Plaskett joined the Board as
his considerable general management skills were considered to be an enhancement to the
overall efficiency and effectiveness of the Board. The Board has concluded that Mr. Plaskett
should continue to serve on the Board for these reasons.
8. Robert J. Stack, Director
Robert J. Bob Stack, 63, Director, appointed to the Board in September 2013. Mr. Stack
was Global Head of Human Resources for Cadbury PLC (formerly Cadburys Schweppes
PLC) until his retirement in 2008, having joined Cadbury in 1990 as Vice President, Human
Resources, Cadbury Schweppes global beverages unit. On becoming Global Head of
Human Resources in 1996, he also joined the board of directors as an executive director
where he led the recruitment of senior executives as well as board members and was also
responsible for corporate communications and external affairs globally. Mr. Stack held
positions of increasing responsibility with Bristol-Myers Company (1972-1980) and
Primerica Corporation (formerly American Can Company) (1980-1990). Mr. Stack has been
a director of publicly held IMI PLC since 2008, and was a director of publicly held J.
Sainsbury PLC from 2005 to 2012. Mr. Stack has extensive general management and human

ITS | Signet Jewelers Strategic Audit

resources knowledge, which enhances the overall effectiveness of the Board. The Board has
concluded that Mr. Stack should continue to serve on the Board for these reasons.
9. Eugenia M. Ulasewicz, Director
Eugenia M. Ulasewicz, 60, Director, appointed to the Board in September 2013. Ms.
Ulasewicz was President of Burberry Group PLCs American division, responsible for the
US, Canada, Latin America, Central and South America until her retirement in March 2013.
Ms. Ulasewicz joined Burberry in 1998 and became a member of its executive committee in
2006. Ms. Ulasewicz has held positions of increasing responsibility with Bloomingdales, a
division of Macys Inc. (formerly Federated Department Stores, Inc.) (1975-1991), Galeries
Lafayette (1991-1993) and Saks, Inc. (1993-1998). Ms. Ulasewicz has served as a nonexecutive director of publicly held Bunzl plc since April 2011. Ms. Ulasewicz has expertise
in branding, marketing, global operations and general management that provides valuable
skills and insights to the Company. The Board has concluded that Ms. Ulasewicz should
continue to serve on the Board for these reasons.
10. Russell Walls, Director
Russell Walls, 70, Director, appointed to the Board in August 2002. He was the Group
Finance Director of BAA plc until his retirement in 2002 and was the senior independent
director of Hilton Group plc until May 2003 and Stagecoach Group plc until August 2006.
Mr. Walls was a non-executive director of Aviva plc until May 2013. He is currently a
director of Biocon Limited, Mytrah Energy Limited and he is the Chairman of Aviva
Insurance Limited. He is a Fellow of the Association of Chartered Certified Accountants.
The Board considers Mr. Walls to have considerable experience as a financial manager and
as such has developed a financial expertise considered to be of significant benefit to its
efficiency and effectiveness. The Board has concluded that Mr. Walls should continue to
serve on the Board for these reasons.
C.

Committee Composition
Audit Committee

Virginia C. Drosos
Dale W. Hilpert
Helen E. McCluskey
Marianne Miller Parrs
Thomas G. Plaskett
Robert J. Stack
Eugenia M. Ulasewicz
Russell Walls

Compensation
Committee
member

member
member
Chairperson

member
Chairperson
member
member

member

Nomination and
Corporate Governance
Committee
member

Member

Chairperson

D. Executive officers (Top management review)

1. Michael W. Barnes
Michael W. Barnes, 53, Chief Executive Officer and Director, was appointed to the Board in
January 2011. Mr. Barnes joined the Company as Chief Executive Officer Designate on
December 1, 2010 and became Chief Executive Officer on January 29, 2011. Prior to joining
ITS | Signet Jewelers Strategic Audit

the Copany, Mr. Barnes was President, Chief Operating Officer and Director of Fossil, Inc.,
having served in those and other executive capacities at Fossil since 1985, and as a Director
of Fossil since the time it became a public company in 1993 and until December 1, 2010. Mr.
Barnes is currently a director of Darden Restaurants Inc.
2. Shaun Carney
Shaun Carney, 48, joined Signet's UK division as the Finance Director in September 2013.
Prior to joining the Company, he held a number of senior financial positions, most recently
at HMV plc.
3. Sebastian Hobbs
Sebastian Hobbs, 44, is Managing Director for Signet's UK Division. Mr. Hobbs joined
Signet's UK division as Commercial Director in March 2011. From November 2006 to
March 2011, he was Group Commercial Director of Blacks Leisure Group. Prior to this, Mr.
Hobbs was Trading Controller for WH Smith, a retail consultant for KPMG, and held
management positions at Mothercare and British Home Stores.
4. Ed Hrabak
Ed Hrabak, 58, was promoted to Executive Vice President and Chief Operating Officer of
the Sterling division, effective June 30, 2012. Prior to this, he served as Senior Vice
President and General Merchandising Manager from 2002, and held a number of
management positions since joining Signet as a merchandise buyer in 1978. Mr.Hrabak is
also a Governing Board member of the Diamond Empowerment Fund.
5. Mark Jenkins
Mark Jenkins, 56, has been Signet Company Secretary since 2004 and Chief Legal Officer
since 2012. Previously, he was Director and Company Secretary at COLT Telecom Group
plc and Group Company Secretary at Peek plc. He is a barrister.
6. Theo Killion
Theo Killion, 62, is the President and Chief Executive Officer of the Zale division, effective
May 29, 2014.
7. Mark Light
Mark Light, 52, is President and Chief Operating Officer of Signet Jewelers Ltd and Chief
Executive Officer of Sterling Jewelers. Mr. Light became Chief Executive Officer of Signets
Sterling division in January 2006 having been President and Chief Operating Officer of the
Sterling division since 2002. He joined Signet in 1978. Mr. Light is currently a Director of
Regis Corporation.
8. Ronald Ristau
Ronald Ristau, 60, joined Signet as Chief Financial Officer Designate on April 15, 2010, and
became Chief Financial Officer on June 26, 2010. Prior to joining the Company he spent ten
years with New York & Company, Inc., most recently as President, CFO and Director. He
has also held posts at Revlon, Inc., Playtex International, United Technologies Corporation
and Peat, Marwick Mitchell & Co. Mr. Ristau is a Certified Public Accountant.

ITS | Signet Jewelers Strategic Audit

9. Robert Trabucco
Robert Trabucco, 59, joined the Sterling division in 2003 as Executive Vice President and
Chief Financial Officer of the Sterling division. He had previously worked for KLS
Associates, a retail consulting practice.

1.2. History and time line

The group was founded in 1949 and grew organically before expanding rapidly through a series
of acquisitions in the late 1980s and early 1990s, and was formerly known as the Ratner Group.
The group changed its name to Signet Group plc in September 1993.
The company moved its primary stock market listing from the London to the New York Stock
Exchange on September 11, 2008, changing its name to Signet Jewelers Limited in the process.
The firm also moved its country of domicile from the United Kingdom to Bermuda on the same
day, although it retains operational headquarters in the Jewelry Quarter, Birmingham.
In February 2014, Signet Jewelers Ltd. agreed to buy Zale Corporation, with Zale shareholders
receiving USD$21 a share in cash in USD$1.4 billion deal. This merger will create a $6.2 billion
firm.

1.3. Products and services

Signet is the largest specialty retail jeweler in the US, UK and Canada. Signets results derive
from the retailing of jewelry, watches and associated services. The business is managed as three
operating divisions: the Sterling division in the US, the Signet UK division, and the Zale division,
which operates in the US and Canada.

1.4. Portfolio Analysis

1.4.1. Total sales (Breakdown by division & brand)
Total Sales: $4,209.2M
Kay: $ 2,157.8 M, 51.3 %.
Jared: $ 1,064.7 M, 25.3 %.
Regionals: $ 295.1 M, 7.0 %.
H. Samuel: $ 368.9 M, 8.8 %.
Earnest Jones: $ 316.7 M, 7.5 %.
Other: $ 0.6 M, 0.1 %.
1.4.2. Operating Income (Breakdown by division)
Total operating income: $570.5 M.
US: $ 553.2 M, 92.9 %.
UK: $ 42.4 M, 7.1 %.

ITS | Signet Jewelers Strategic Audit

10

1.5. Financial Analysis

Current performance for fiscal year 2014

Same store sales: up 4.4% (Fiscal 2013: 3.3%)

Total sales: $4,209.2 million (Fiscal 2013: $3,983.4 million), up 5.7%

Operating margin: 13.5% (Fiscal 2013: 14.1%)

Diluted earnings per share: $4.56 (Fiscal 2013: $4.35), up 4.8%

E-commerce sales: $164.1 million (Fiscal 2013: $129.8 million), up 26.4%

Acquired a rough-to-polished diamond factory in Gaborone, Botswana

Opened 83 new stores

Increased sales of branded differentiated and exclusive merchandise by 370 basis points

to 31.1% of US merchandise sales

Enhanced our digital ecosystem through our websites, mobile technology and social

media so customers are able to interact with us whenever and wherever they choose

Repurchased $104.7 million of outstanding shares at an average price of $67.24 per share

Increased quarterly dividend in Fiscal 2014 by 25%

Achieved return on capital employed of 25.2%

1.6. Overall Financial Analysis of the Financial Statements

(2014 Fiscal highlights)
(in millions except per share and
store data)
Sales
Operating Income
Net Income
Diluted Earnings Per Share
Working Capital
Capital Expenditures
Stores

2010

2011

2012

2013

2014

$3,273.6
264.5
157.1
1.83
1,814.3
43.6
1,913

$3,437.4
372.5
200.4
2.32
1,831.3
57.5
1,857

$3,749.2
507.4
324.4
3.73
2,158.3
97.8
1,853

$3,983.4
560.5
359.9
4.35
2,164.2
134.2
1,954

$4,209.2
570.5
368.0
4.56
2,356.9
161.8
1,964

ITS | Signet Jewelers Strategic Audit

11

2. Environmental Analysis
2.1. External Environment: Opportunities and threats
2.1.1. Natural Environment
A. Climate in the UK is mostly temperate and stable. Weather condition in general doesnt
affect industrial production or trade. (O)
B. Geographical closeness to mainland Europe promises ease in distribution and delivery
of goods and the opening of new markets for the goods with reduced costs and times of
shipping across Europe. (O)
2.1.2. PEST Analysis
2.1.2.1. Political-Legal Environment
A. The UK enjoys a very stable governmental and political situation which ensures the
predictability of the politico-legal environment. (O)
B. The Cameron coalition government pledged to reduce the corporation tax rate to 21% by
2014, which can be significantly lower than the US, which has the highest nominal top
corporate taxation rate in the developed world at 35%. (O)
C. The unrest in the Middle East and Ukraine has a potential impact on the global energy
costs and could cause potential problems regarding some major emerging markets for
British goods. (T)
2.1.2.2. Economic Environment
A. The British economy was greatly affected by the 2008 recession. This was in particular
due to the fact that financial services, banking and insurance represent the key drivers
behind the British GDP growth. (T)
B. Increased consumer spending in the second half of 2013 unexpectedly accelerated the
growth of the GDP in the UK to reach 1.4%, compared to the disappointing year of 2012.
(O)
C.

D.

E.

The market for real jewelry in the UK has been heavily impacted by the 2008 recession
and suffered substantial decline compared to the growth in the market of costume
jewelry. (T)
The competitive landscape in the UK showed marked consolidation, caused by the rise of
the market share of the top three domestic brands (led by Goldsmiths) and the failing of
many smaller independent jewelers. (T)
Jewelry, being a category extremely reliant on macroeconomic trends, has suffered a
steep decline since the recession. It is hoped that the slow recovery in economic health
will lead to increased consumer spending in non-essential items such as jewelry
associated with decrease in the costs of living and decrease in the unemployment rates.
(O)

2.1.2.3. Sociocultural Environment

A. The UK (especially London) benefits greatly from the influx of high income tourists from
all over the world (particularly the Gulf area) who are very likely consumers of jewelry.
(O)

ITS | Signet Jewelers Strategic Audit

12

B.
C.

Nationals of UAE, Oman, Qatar and Kuwait had their UK visa requirement waived
which caused an increase of up to 43% in the number of visitors from these countries. (O)
The rebound of the economy following the recession is expected to produce an increase
in marriages and civil partnerships which in turn is expected to cause an increase in the
consumption of jewelry. (O)

2.1.2.4. Technological Environment

A. Figures from the Organization for Economic Co-operation and Development (OECD)
show that the British have the highest rate of online shopping in the developed world
with 60% of adults paying for goods and services online, compared with the OECD
average of only 30% (O)
B. British consumers spent 68.2 billion on the internet last year, an increase of almost 10
billion on 2010, according to IMRG, a body which represents the UKs online retailers.
This is equivalent to 2,180 for every adult in the UK. (O).
C. Vastly developed telecommunication networks insures the safety and security required
for online shopping, while the world famous British postal services facilitates shipping to
the consumers. (O)
D. The UK has the fifth lowest number of businesses that use the internet for selling goods
in the OECD countries, which means that the market for online shopping has great
opportunities. (O)
2.1.3. Task Environment Analysis
The British jewelry market is a large competitive one, despite the 2008 recession which
resulted in a major destructive hit to the small players in such market , the major ones
including signet were able to survive it and replace the smaller players too after the hit was
over, the jewelry market in the UK enjoyed steady growth rates after the recession was over
and exceeded such rates by the second half of 2013.
Competitors for Signet Company were decreased number wise since the 2008 recession due to
the exit of the small players from the British market but on the other hand the large present
ones are showing more fierce competition with signet currently
On the other hand the U.S. currently accounts for the largest jewelry market in the world with
more than half of its market being dominated by the diamond jewelry segment, but in 2013
the U.S. jewelry market growth rates showed significant decline trends
2.1.3.1. Porter forces
A. Threat of new entrants: low ( The jewelry business is a macroeconomic dependent one
where players are few and new entrants are rare)
B. Bargaining power of buyers: medium (due to the presence of several large players and
the fierce competition in between)
C. Threat of substitute: medium ( where in such un-clear economic environment people
might tend to find less expensive products and imitated ones)
D. Bargaining power of suppliers: low ( as such business is subjected to worldwide fixed
prices in a wide opened market with several suppliers present)
E. Rivalry among competing firms: High ( due to the fierce competition between the
present powerful competitors)
F. Relative power of unions, governments, special interest groups, ...: low

ITS | Signet Jewelers Strategic Audit

13

2.1.4. Summary of External Factors (EFAS Matrix)

Strategic Factors

weight

Rating

Weighted
score

Geographical closeness to Europe as a large

market

0.09

0.36

0.15

0.75

0.09

0.36

0.08

0.24

Comment

Opportunities
O1

O2

O3

O4

Signs and figures showing Increased U.K.

consumer spending in the second half of 2013 as a
promising trend

Economic recovery in U.K. specifically and

Europe and U.S.A generally as markets

High rates of online shopping +increased internet

functionality and security

O5

Political stability and promising taxation policies

in the U.K.

0.08

0.32

O3

Jewelry interested Tourism

0.09

0.36

Threats
T1

The 2008 recession hit that affected the market

growth rates greatly

0.10

0.40

T2

The U.S. jewelry declining market being the

largest market world wide

010

0.40

T3

Customer fear since 2008 and the rise of

substitute

0.07

0.21

T4

The fierce competition among the present

powerful competitors

0.15

0.75

Total scores

1.00

4.15

ITS | Signet Jewelers Strategic Audit

14

2.2. Internal Factor Analysis: Strengths and Weaknesses

2.2.1. Strengths and Weaknesses
2.2.1.1. Strengthens
A. Strong store brands
Signet is not dependent on any material patents or licenses in either the US or the UK.
However, it does have several well-established trademarks and trade names which are
significant in maintaining its reputation and competitive position in the jewelry retailing
industry. These registered trademarks and trade names include the following in Signet's US
operations: Kay Jewelers; Jared The Galleria Of Jewelry; JB Robinson Jewelers; Marks&
Morgan Jewelers; Belden Jewelers; Weisfield Jewelers; Osterman Jewelers; Shaw's Jewelers;
Rogers Jewelers; LeRoy's Jewelers; Goodman Jewelers; Friedlander's Jewelers; Every kiss
begins with Kay; Peerless Diamond; Hearts Desire; Perfect Partner; Open Hearts by Jane
Seymour; and Love's Embrace. Trademarks and trade names include the following in
Signet's UK operations: H.Samuel; Ernest Jones; Leslie Davis; Forever Diamond; and Perfect
Partner.
The value of Signet's trademarks and trade names are maintained and increased by Signet's
expenditure on staff training, marketing and store investment.
B. Brand differentiated and exclusive merchandise
The development of branded differentiated and exclusive merchandise raises the profile of
Signets stores, helps to drive sales and provides its well trained sales associates with a
powerful selling proposition. Signets scale and proven record of success in developing
branded differentiated and exclusive merchandise attracts offers of such programs from
jewelry manufacturers, designers and others ahead of competing retailers, and enables it to
achieve its supply chain strengths. Management plans to develop additional branded
differentiated and exclusive ranges as appropriate and to further expand and refine those
already launched.
C. Outstanding customer service
Signet has in place comprehensive recruitment, training and incentive programs and uses
employee and customer satisfaction surveys to monitor and improve performance. A
continual priority of the US division is to improve the quality of the customer experience. To
enhance customer service, the US division is increasingly using sales-enhancing technology,
including customer-assisted selling systems. These computerized tools enable a sales
associate to better assist a potential customer to make a purchase decision.
D. Advertising effectiveness
Signet has strong, well-established brands and leverages them with advertising (television,
print and online), catalogs and the development of customer relationship marketing
techniques. While marketing activities are undertaken throughout the year, the level of
activity is concentrated at periods when customers are expected to be most receptive to
marketing messages, which is ahead of Christmas Day, Valentines Day and Mothers Day.
E. Strong supply chain
Signets objective with this initiative is to secure additional, reliable and consistent supplies
of diamonds for its customers while achieving further efficiencies in the supply chain. Signet
directly transacts business with suppliers on a worldwide basis at various stages of the
supply chain, with third party diamond cutting and jewelry manufacturing being
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predominantly carried out in Asia. Management continues to seek ways to reduce the cost of
goods sold and enhance the resilience of its supply chain.
F. High quality store base
Signet stores trade in major regional shopping malls and prime High Street locations (main
shopping thoroughfares with high traffic flow) with high visibility and a luxury appearance.
G. In-house customer financing (US)
Signet is offering finance facilities benefits their customers establishes credit policies that
take into account the overall impact on the business.
The various customer finance programs assist in establishing and enhancing customer
loyalty and complement the marketing strategy by enabling a greater number of purchases,
higher units per transaction and greater value sales.
H. Financial strength and flexibility
Financial strength and flexibility allow Signet to take advantage of investment
opportunities, facilitates the ability to develop further branded differentiated and exclusive
merchandise, improves the efficiency of the supply chain, supports marketing expense and
improves operating margins
2.2.1.2. Weaknesses
A. Competitive market
Jewelry manufacturing in the USA and UK has seen sharp declines in recent years due to
strong competition. Many developing countries are in a good position to provide products at
highly competitive prices. As a result, many firms have chosen to produce goods overseas.
B. Investments in research and development (R&D)
Signet investment R&D is very poor as Signet concentrates on acquiring stores or diamond
polishing factory as in Botswana or established a diamond buying office as in India.
C. Global penetration
Global penetration is low as compared to leading international players
D. High cost of opening new stores
As Signet stores trade should be in major regional shopping malls and prime High Street
locations with a luxury appearance, the high cost of opening new stores limited the
expansion and penetration of Signet stores

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2.2.2. IFAS Matrix

Internal Factors Analysis Summery ( IFAS )

Internal Factors

Weight

Rating

Weighted
scores

Comments

Strengths
S1

Strong store brands

0.15

0.75

S2

Brand differentiated and exclusive merchandise

0.10

0.40

S3

Outstanding customer service

0.05

0.20

S4

Advertising effectiveness

0.10

0.30

S5

Strong supply chain

0.05

0.15

S6

High quality store base

0.05

0.10

S7

In-house customer financing (US)

0.10

0.40

S8

Financial strength and flexibility

0.10

0.30

Weaknesses
W1

Competitive market

0.10

0.40

W2

Investments in research and development (R&D)

0.05

0.10

W3

Global penetration

0.10

0.40

W4

High cost of opening new stores

0.05

0.10

Total Score

1.00

3.60

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2.3. Overall Environmental Analysis

2.3.1. SFAS Matrix - Analysis of Strategic Factors
Strategic Factors Analysis Summery (SFAS)
Strategic Factors

weight

Rating

Weighted
score

Comment

Strengths
S1

Strong store brands

0.10

0.40

S2

Brand differentiated and exclusive

0.10

0.40

S3

Advertising effectiveness

0.10

0.30

S4

Financial strength and flexibility

0.10

0.40

Weaknesses
W1

Competitive market

0.10

0.40

W2

Global penetration

0.08

0.24

Opportunities

O1

Signs and figures showing Increased U.K. consumer

spending in the second half of 2013 as a promising
trend

0.10

0.40

O2

Economic recovery in U.K. specifically and Europe

and U.S.A generally as markets

0.09

0.36

O3

Jewelry interested Tourism

0.05

0.15

Threats
T1

Competition with powerful competitors

0.10

0.40

T2

The 2008 recession hit that affected the market growth

rates greatly

0.08

0.16

Total scores

1.00

3.61

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3. Conclusion and Recommendations

3.1. TOWS Strategic Alternatives Matrix

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Internal Strengths (S)

1. Strong store brands
2. Brand differentiated and exclusive
3. Advertising effectiveness
4. Financial strength and flexibility

External Opportunities (O)

External Threats (T)

1. Increased U.K. consumer

spending
2. Economic recovery in U.K.
specifically and Europe and U.S.A
generally
3. Jewelry interested Tourism

1. Competition with cheap Asian replicas

2. The 2008 recession hit that affected the
market growth rates greatly

SO
"Maxi-Maxi" Strategy
1. New collections design for U.K
and U.S.A Markets
2. New touring oriented collections
(souvenirs)

ST
"Maxi-Mini" Strategy
1. Distributing for other brands
(competitors alliance)

(R&D department or business unit

with jewelry designers and market
research functions)

Internal Weaknesses (W)

1. Competitive market
2. Global penetration

WO
"Mini-Maxi" Strategy
1. Full spectrum pricing
2. New tourism oriented collections
(souvenirs)

WT
"Mini-Mini" Strategy
1. Proceed with caution for new
investments
2. Optimize operational costs

(R&D department or business unit

with jewelry manufacturing
effectiveness, cost reduction and
market research)

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3.2. Strategic alternatives

Growth - Diversification
Establish R&D Business unit
New Products and services
New Pricing spectrum
This alternative is to define a new set of products such as tourism oriented jewelry, new sub
brands or new innovative designs for the existing brands. As well as tackling the market from a
wider angel to make use of the spread branches and well-known name (brands) by introducing a
new full spectrum priced products. Also, one of the major advantages of the signet corporate is
its well-trained, well presentable branch staff (sales personnel) which can easily be developed to
offer Services such as advise for light customization if available for the new customable
products, jewelry maintenance etc.). All of those can be all achieved utilizing a strong new
R&D business unit and linking their targets directly to profits reflected. Aggressive marketing
must be utilized through the R&D unit through its market research division to hit the variables of
pricing, tourism oriented products and service matchability.
(Pros: high possibility of additional revenue. Cons: brands loose its original niche market
or differentiation)

Stability - Profit
Establish R&D Business unit
New operational procedures
HRM revamping (incentives system)
Through researching and optimizing manufacturing procedures, service and customer care
processes, new operational cost-savings can be achieved. Also, linking the incentives system, job
design and the whole HRM structure to the profit objective should reflect on the corporate
overall profits.
(Pros: immediate profit. Cons: limiting additional profit, operational overhead)
Retrenchment turn around
At tough times the turnaround is the best first choice for many corporates. Revamping the
whole corporate structure toward emerging market or changing market environment can be
sometimes the only feasible option for the corporate to survive.
(Pros: Market alignment. Cons: loosing distinguished designers, salesmen etc.)

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3.4. Recommended Strategies

3.4.1. Corporate Strategy
The recommended strategy is a mix of all the above strategies. One can argue the sum of
them is a (proceed with caution) strategy.

Establish R&D Business unit

New Products and services
New Pricing spectrum
New operational procedures (Cost oriented)
Turn around
HRM revamping (incentives system)

3.4.2. Business Strategy

Competitive
Differentiation - Products and services
Lower Cost manufacturing and logistics
Cooperation Alliances - distribution ship

3.4.3. Functional Strategy

3.4.3.1. Marketing and Sales
Changing pricing strategies to penetrate new markets of services Adopting pull
strategy to increases their services and support revenue .
Targeting the tourism market with customized marketing campaigns .
launching marketing campaigns on line, enhancing the E-sales sector .
Action Plan List
Fighter brands with competitive prices to be launched within the first quarter
of 2015 according to the campaign geographical distribution plan and
schedule.
Airports show rooms, Aeroplanes on board sales contracts to be finalized
with end of January 2012 as due date .
Online awareness, guiding and support campaigns to be launched targeting
the main social networks, related websites and personal mails by end of
February as due date.

3.4.3.2. Information systems and Technology

Stability of the Platforms Integration and Unification of tools and Systems together
with a cost differentiation strategy to support the company in their overall strategy
Work on providing the company with a competitive edge over the other companies
operating in the same business and covering the same segment.
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Action plan list

Finalizing the contracts for outsourcing the IT department through a
reputable professional company by end of December 2014 as due date.
Recruitment, training and development programmes to be established and
launched by the end of march as due date targeting the establishment of a
new IT department capable of successing the outsourcing company by end of
December 2014 as due date
3.4.3.3. Financial Strategy
Support cost saving oriented procedures.
Action Plan list
A comprehensive cost saving program for each department to be finalized by
the end of December 2014 as due date .
Establishing a new department for the cost saving plan implementation and
audit by the end of December 2014 as due date.
3.4.3.4. R & D Engineering
Utilizing the Platforms and the resources in the company to efficiently innovate on the
current product base and the market brand new technologies Also enhance the R&D
to further reduce costs of operations.
Action plan list
launching a market research program for the determination of the new
markets to be penetrated and the best pricing strategies for such penetration .
A continuous market research program to be performed through the whole
year for engineering and design departments support and guidance.
Launching a research program for operating cost saving guidance and
enhancement to be completed by the end of March 2015

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3.6. Implementation
Strategy Implementation

3.4.1

Short term/Immediate strategy Implementation 1st year

The implementation of the strategy over the short term mainly for executing the
complementary and the cooperation strategy through the following approaches:
1- New Business Unit a new R&D business unit designed to connect consumers to marketers and
merchants is mandatory.
2- Strategic Alliances with Market leaders as a distributer.
3- Acquisition of related logistics companies to increase the competitive advantage

3.4.2

Long Term strategy Implementation 2nd to 4th year

1- Innovation We suggest that signet should attempt to boom the market (reshape it by reinnovating the meaning of the jewelry and its usage purposes. Example (apple iPhone)
2- Diversification Full price spectrum as well as event oriented jewelry. Market research and
further segmentation of markets helps to identify new groups of customers.

3- Market expansion This strategy entails finding new markets for existing products or sharing
competitors markets through offering distribution shops.

3.7. Evaluation and Control

Output Controls
Number of allied competitors (product lines and spectrum annually)
Standardized product invention system (number of new lines and products quarterly)
Input Controls
Value based management,
Behavior Controls
Keeping the company culture and values as started from beginning,
Quality and differentiation perception for the users,
Risk Management
Problems to attach Arab countries market.
Create budget to research and development and invest in the Human capital.
Management and employee turnover.

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