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SIGNET STRATEGIC

AUDIT

TABLE OF CONTENTS
I.

Current State

II. Environmental Analysis


I.
II.

External (Opportunities and Threats)


Internal (Strengths and Weaknesses)

III. Strategies
I.
II.

Alternatives
Recommended

IV. Implementation
V. Evaluation and Control

CORPORATE OVERVIEW
Founded in 1949
formerly known as the Ratner Group
September 1993 changed its name to Signet Group plc.
September 11, 2008, moved its primary stock market to the New York
Stock Exchange, changing its name to Signet Jewelers Limited and
moved its country of domicile to Bermuda
February 2014, Signet Jewelers Ltd. agreed to buy Zale Corporation
Signet is the largest specialty retail jeweler in the US, UK and Canada

CORPORATE OVERVIEW
Strategic Posture:
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.

CORPORATE OVERVIEW
Board of directors
The sustainable enhancement of business performance and shareholder value.
Determining all major policies, effective strategies and management are in
place , assessing performance, reviewing the systems of internal control and
setting policy including that relating to social, ethical and environmental matters.

Board members
1. H. Todd Stitzer, Chairman

6. Marianne Miller Parrs, Director

2. Michael W. Barnes, Chief Executive

7. Thomas G. Plaskett, Director

Officer and Director

8. Robert J. Stack, Director

3. Virginia C. Drosos, Director

9. Eugenia M. Ulasewicz, Director

4. Dale W. Hilpert, Director

10. Russell Walls, Director

5. Helen E. McCluskey, Director

CORPORATE OVERVIEW

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

CORPORATE OVERVIEW
Executive officers (Top management review)
1. Michael W. Barnes
2. Shaun Carney
3. Sebastian Hobbs
4. Ed Hrabak
5. Mark Jenkins
6. Theo Killion
7. Mark Light
8. Ronald Ristau
9. Robert Trabucco

CORPORATE OVERVIEW

FINANCIAL RESULTS
(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

FINANCIAL ANALYSIS
Current performance for fiscal year 2014
Total sales: $4,209.2 million (Fiscal 2013: $3,983.4 million), up 5.7%
Operating margin: 13.5% (Fiscal 2013: 14.1%), down 0.6%
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%
Increased quarterly dividend in Fiscal 2014 by 25%
Achieved return on capital employed of 25.2%

ENVIRONMENTAL
ANALYSIS
External Environment: Opportunities and
threats
Natural Environment
PEST Analysis
Porters five forces

ENVIRONMENTAL
ANALYSIS
Political-Legal Environment
Stable, predictable

Economic Environment

Recession, come back

Sociocultural Environment
Tourism rebound

Technological Environment
E-commerce

Strategic Factors

weight

Rating

Weighted
score

0.09

0.36

0.15

0.75

0.09

0.36

0.08

0.24

Opportunities
O1

O2

Summary of
External
Factors
(EFAS
Matrix)

O3

O4

Geographical closeness to Europe as a large


market
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

Comment

INTERNAL FACTOR
ANALYSIS
Strengths

Strong store brands


Brand differentiated and exclusive merchandise
Outstanding customer service
Advertising effectiveness
Strong supply chain
High quality store base
In-house customer financing (US)
Financial strength and flexibility

INTERNAL FACTOR
ANALYSIS CONTD
Weakness

Competitive market
Investments in research and development (R&D)
Global penetration
High cost of opening new stores

Internal Factors

Weight Rating

Weighted
scores

Strengths

INTERNAL
FACTORS
ANALYSIS
SUMMERY
( IFAS )

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

Comments

Strategic Factors

weight

Rating

Weighted
score

Strengths

STRATEGIC
FACTORS
ANALYSIS
SUMMERY
(SFAS)

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

Comment

TOWS MATRIX

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)
(R&D department or business unit with
jewelry manufacturing effectiveness,
cost reduction and market research)

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

ALTERNATIVE STRATEGIES
Growth Diversification

(conglomerate - Innovation. i.e. Apple)

Establish R&D Business unit

New Products and services


New Pricing spectrum

(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)

(Pros: immediate profit. Cons: limiting additional profit, operational overhead)

Retrenchment turn around

(Market alignment & Value based

management) (Pros: Market alignment. Cons: loosing distinguished designers, salesmen


etc.)

RECOMMENDED STRATEGY
The recommended strategy is the sum of all
the above strategies. One can argue the sum
of them is a (proceed with caution) strategy.

BUSINESS STRATEGIES
Competitive
Differentiation - Products and services
Lower Cost manufacturing and logistics

Cooperation
Alliances - distribution ship

FUNCTIONAL STRATEGIES
Marketing and Sales
pricing
Tourism
E-commerce

Information systems and Technology


Stability of the Platforms
E-commerce technical security, user friendly

Financial Strategy
Support cost saving oriented procedures.

R & D Engineering
Efficiency
Innovate
Market research

Short term/Immediate strategy


Implementation 1st year
New Business Unit
a new R&D business unit designed to connect consumers to
marketers and merchants is mandatory.

Strategic Alliances with Market leaders as a


distributer.
Acquisition of related logistics companies to increase
the competitive advantage

Long Term strategy Implementation


2nd to 4th year
Innovation
We suggest that signet should attempt to boom the market
(reshape it by re-innovating the meaning of the jewelry and its
usage purposes. Example (apple iPhone)

Diversification
Full price spectrum as well as event oriented jewelry. Market
research and further segmentation of markets helps to identify
new groups of customers.

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

Long Term strategy Implementation


2nd to 4th year
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 new market.
Create budget to research and development and invest in the Human capital.

Q&A