Signet Jewelers (SIG) is the world's largest retailer of diamond jewelry and the largest specialty jewelry retailer in the U.S., U.K. and Canada; the shares have risen 172% since the start of the year, notes Bruce Kaser, editor of Cabot Turnaround Letter.

With sales of more than $6 billion, the company operates 2,800 stores, including Kay Jewelers, Zales, Jared and others. Under its previous leadership, Signet suffered large losses in its in-house credit operations after using easy credit terms to boost sales, neglected to update its merchandising and marketing, had an ineffective e-commerce strategy and tolerated a toxic culture.

New leadership is making impressive progress in reversing all of these problems as it overhauls every aspect of the company. With the turnaround, Signet is becoming much more relevant, profitable and valuable.

The turnaround is working exceptionally well as the leadership has aggressively overhauled the company’s entire business, helped in part by generous government stimulus checks and tax refunds flowing to customers and a post-pandemic surge in weddings.

The most recent quarter produced profits that were sharply higher than estimates and the company raised its full-year profit guidance by nearly 50%.

The CEO leading the turnaround has focused on the basics: expand the company’s marketing to reach current and potential new customers, offer products that customers want, and make the buying process easy.

One intangible is that Signet’s digital/social media upgrade may be polishing up some of the reputational tarnish of its mall-based stores, such that new customers in prime, higher-income demographic groups are now comfortable with buying from the company.

Signet’s profits and balance sheet are robust. The share valuation remains depressed despite the price run-up. We continue to like SIG shares.

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