As the jewelry market in the U.S. is still recovering from the
recession, the news of
Signet Jewelers Limited
) pushed up the shares of the former by 5.8%, as of today.
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SIGNET JEWELERS (SIG): Free Stock Analysis
ZALE CORP NEW (ZLC): Free Stock Analysis
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Moreover, the company hit a 52-week high of $99.50 on the last
trading day, meeting the Zacks Consensus average analyst price
target. However, it eventually closed at $99.04, amassing a
return of 64.3% over the past one year.
As per the agreement between the two companies, Signet will
acquire all of Zale's outstanding shares at $21 each by cash. The
acquisition would result in combined sales of $6.2 billion
generated from approximately 3,600 retail outlets and annual
synergies of roughly $100 million within the three fiscal years,
resulting from operational efficiencies.
This transaction valued at $1.4 billion will be financed via bank
debt, other debt financing and the securitization of a
considerable part of Signet's accounts receivable.
Post-acquisition, Zale will continue to be spearheaded by its
current CEO, Theo Killion, who will report to Mike Barnes, the
CEO of Signet.
Signet also performed well this holiday season, as it registered
a comparable-store sales growth of 5% during the period, on the
back of robust results from the company's U.K. and ecommerce
segments. The company operates more than 1,400 U.S. outlets under
the brand names Kay Jewelers and Jared The Galleria of Jewelry,
whereas its U.K. division operates about 500 outlets under the
brand names H.Samuel and Ernest Jones.
Currently, Signet holds a Zacks Rank #4 (Sell), as the U.S.
economy is still picking up post recession. The company trades at
a forward P/E of 19.0x, a 7.2% discount to the peer group average
of 20.47x. Average volume of shares traded over the last 3 months
stands at approximately 1,388.8K. Also, Signet's long-term EPS
growth rate is 8%, reflecting optimism about the company.
Apart from Signet, retailers like
The Walt Disney Co.
Foot Locker, Inc.
) achieved 52-week highs of $83.65 and $46.80, respectively on
Mar 7, 2014.