Key Takeaways:
Signet Jewelers Ltd. (NYSE: SIG) raised its full-year profit forecast after second-quarter adjusted earnings beat estimates, sending the shares up 24% on Sept. 10.
The Hamilton, Bermuda-based jeweler now expects fiscal 2027 adjusted diluted EPS of $10.45 to $12.15, up from a prior range of $9.20 to $11.00, while leaving its total sales outlook unchanged at $6.7 billion to $6.9 billion. Adjusted operating income guidance rose to $535 million to $605 million from $480 million to $560 million, and adjusted EBITDA to $730 million to $800 million from $665 million to $745 million.
Adjusted diluted EPS for the 13 weeks ended Aug. 1 came in at $2.19, up 36% from $1.61 a year earlier. GAAP diluted EPS was $1.33, compared with a loss of $0.22, and included a $0.86 negative impact tied mainly to asset impairments, net of tax. Net income was $52.1 million versus a $9.1 million loss.
Sales slipped 0.5% to $1.528 billion even as same-store sales rose 2.2%, with positive comparable growth across all fine jewelry brands. Merchandise average unit retail climbed about 6% in constant currency, with gains in both Bridal and Fashion and high-single-digit unit growth at higher price points. Bridal revenue was $662.6 million, down from $666.0 million, while services revenue rose to $199.2 million from $192.3 million.
Gross margin expanded 80 basis points to 39.4%, helped by roughly $15 million of refunds on tariffs previously paid — $13 million more than the company had expected — plus lower inventory and distribution costs. Higher gold costs were a partial offset. SG&A fell to $493.6 million from $505.3 million and narrowed to 32.3% of sales from 32.9%, lifting adjusted operating margin to 7.0% from 5.6%.
The company also extended its consumer credit partnership with Bread Financial through December 2035, an agreement that includes profit sharing and a signing bonus recognized over the contract's life. Management expects the arrangement to contribute $30 million to $40 million of non-comparable revenue and gross margin in fiscal 2027.
Cash and equivalents ended the quarter at $526.8 million, up from $281.4 million a year earlier but below the $874.8 million at the close of fiscal 2026. Signet used $73.5 million of operating cash in the first half, a $15.5 million improvement from the prior-year period, and spent $169.9 million repurchasing 1.9 million shares, including a $50 million accelerated buyback. The board raised the remaining repurchase authorization by about $385 million to $700 million and declared a quarterly dividend of $0.35 per share, payable Nov. 20 to holders of record Oct. 23.
The quarter also carried $19 million of Diamonds Direct trade-name impairment and a $19.2 million impairment and credit-loss provision tied to the Sasmat investment and loans.
For the third quarter, Signet guided total sales of $1.37 billion to $1.41 billion with same-store sales between a 1.0% decline and 2.0% growth, and adjusted operating income of $31 million to $48 million. Full-year assumptions include $30 million of tariff refunds, a $60 million to $80 million revenue reduction from the James Allen brand transition with minimal adjusted operating income impact, capital expenditures of $150 million to $180 million, and a 23% to 25% tax rate excluding discrete items.
The unchanged sales range alongside higher profit guidance means the raise rests on margin mechanics, the credit agreement and a smaller share count rather than on stronger top-line demand. That distinction matters for specialty and discretionary retail peers, where the read-across is about cost control and pricing power rather than a consumer rebound. Signet's next test is the third-quarter report, when investors will see whether margins hold once the tariff refunds roll off and whether the James Allen transition stays inside its $60 million to $80 million revenue drag.
This article is for informational purposes only and does not constitute investment advice.
