Signet Jewelers Q1 Earnings Call Highlights

Key Points

• Signet Jewelers beat expectations in Q1, with comparable sales up 1.8% and adjusted EPS jumping more than 30% to $1.56. Stronger sales and earnings led the company to raise the midpoint of its full-year guidance.
• Higher gold costs pressured margins, but Signet offset some of that impact through cost discipline, lower SG&A, and operating leverage. Inventory was roughly flat year over year, while cash rose to more than $600 million and free cash flow improved.
• The company is reshaping its brand portfolio and digital strategy, repositioning Blue Nile as a premium natural-diamond brand while transitioning James Allen traffic to Blue Nile. Signet also continues redesigning websites and shifting marketing toward social-first creator partnerships as part of its Grow Brand Love strategy.

Signet Jewelers NYSE: SIG said it delivered a stronger-than-expected start to fiscal 2027, with comparable sales growth across every category and adjusted earnings growth that prompted the jeweler to raise the midpoint of its full-year guidance.

Chief Executive Officer J.K. Symancyk told investors on the company’s first-quarter earnings call that Signet posted “another quarter of comp sales growth” while also advancing its multiyear “Grow Brand Love” strategy. He said the company recorded positive comparable sales in each month of the quarter, though trends softened somewhat in the second half before rebounding around Mother’s Day and into the second quarter.

“We’ve now delivered positive comp sales in 15 of the last 17 months, and have seen recently our strongest two-year stacks since pandemic stimulus spending,” Symancyk said.

First-quarter sales rise as AUR increases

Chief Operating and Financial Officer Joan Hilson said first-quarter revenue was $1.6 billion, with comparable sales up 1.8%. James Allen represented a one-point drag on comparable sales in the quarter, she said.

By category, bridal and fashion grew in the low single digits, while watches and services posted stronger growth. Average unit retail, or AUR, rose nearly 5% and increased across all categories, including high-single-digit growth in bridal.

Symancyk said Signet saw strength at higher price points, with collections including Shy supporting fashion growth and Neil Lane and Monique Lhuillier helping drive bridal. He also said unit trends improved sequentially by three points compared with the fourth quarter, though lower price points remain more challenged due in part to gold costs.

“If you look at price points above $2,000 in our business, they’re call it mid-ish single digits in terms of unit penetration, but 40-ish% as it relates to revenue,” Symancyk said during the Q&A portion of the call.

Margins pressured by gold, offset by cost discipline

Adjusted gross margin was $589 million, with the rate down approximately one percentage point. Hilson said the decline reflected 70 basis points of merchandise margin pressure, primarily from higher gold costs, partially offset by 20 basis points of occupancy leverage.

SG&A expenses fell 3% from a year earlier, reflecting restructuring under the Grow Brand Love operating model and ongoing spending discipline. Adjusted operating income rose 12%, and adjusted diluted earnings per share increased more than 30% to $1.56, helped by earnings growth, higher interest income and a lower diluted share count.

Hilson said Signet repurchased approximately 1.3 million shares for $114 million as of the morning of the call. Once an accelerated share repurchase is completed, the company expects to have about $355 million remaining under its share repurchase authorization.

Inventory ended the quarter at $2 billion, roughly flat year over year, while cash increased nearly $340 million to more than $600 million. Free cash flow improved by $43 million from last year, despite the payout of annual incentive compensation that did not occur in the prior year.

Blue Nile repositioning and James Allen transition continue

Hilson said Signet is repositioning Blue Nile as a premium brand focused on a more affluent customer and anchored in natural diamonds. She said the company believes about 70% of engagement market revenue remains in natural diamonds, and that natural diamonds account for more than 90% of engagement revenue above $5,000.

To accelerate that strategy, Signet recently acquired The Clear Cut, a digitally native natural diamond jewelry brand. Hilson described the transaction as a small tuck-in acquisition that brings diamond expertise, a proprietary curation process, concierge service and a significant social media following to Blue Nile.

The company also completed the commercial transition of James Allen, sunsetting its website in mid-May and redirecting traffic to Blue Nile. Hilson said the company is now using James Allen as a proprietary collection while discontinuing remaining assortment not relevant to other brands. Signet recorded a $32 million non-cash inventory write-down related to the exit of that inventory, and total restructuring and related charges were $42 million, most of which were non-cash.

Hilson said the company does not expect material charges related to the James Allen transition going forward.

Company raises full-year outlook

Signet raised the midpoint of its full-year outlook, citing first-quarter performance and second-quarter momentum. For fiscal 2027, the company now expects:

• Same-store sales ranging from down 0.75% to up 2.5%.
• Total revenue between $6.7 billion and $6.9 billion.
• Adjusted operating income between $480 million and $560 million.
• Adjusted earnings per share between $9.20 and $11.00.
• Capital expenditures of $150 million to $180 million.

The company expects AUR growth across categories with modest unit declines, especially at lower price points, largely due to higher gold costs. Hilson said that beginning in the second quarter, Blue Nile and James Allen will be excluded from same-store sales for the next year to reflect the transition of those brands, which should benefit same-store sales by 50 to 70 basis points going forward.

For the second quarter, Signet expects same-store sales to rise 0.5% to 2.5%, with adjusted operating income between $79 million and $93 million. Hilson said merchandise margin is expected to be lower in the quarter because of higher gold costs, but the company expects SG&A and occupancy leverage to generally offset that pressure at the midpoint of guidance.

Strategy focuses on brand distinction and operating efficiency

Symancyk said Signet is in the second year of its Grow Brand Love strategy, which focuses on brand distinction, unlocking portfolio value and strengthening the operating model.

The company is redesigning websites for Kay, Zales and Jared, with the work furthest along at Jared and expected to be completed for all three in the early part of the third quarter. Symancyk said the websites are Signet’s largest storefronts and that improving search, navigation and storytelling is important ahead of the holiday season.

Signet is also shifting marketing toward social-first storytelling and creator partnerships. Symancyk cited Zales’ partnership with Ashley Graham and Kay’s collaboration with Christian McCaffrey, saying the latter delivered more than twice the company’s average social engagement rate.

On tariffs, Symancyk said Signet continues to monitor developments and has submitted refund claims for most purchases where it is the importer of record. He said a small amount has been approved and received, but it is too early to quantify potential refunds or their timing.

“We believe Grow Brand Love is setting the foundation for sustainable long-term growth, with the ability to grow even during turbulent macro periods,” Symancyk said.

About Signet Jewelers NYSE: SIG

Signet Jewelers Ltd is the world's largest retailer of diamond jewelry, operating a diversified network of retail stores across the United States, Canada, the United Kingdom and Ireland. Its portfolio includes well-established banners such as Kay Jewelers, Zales, Jared The Galleria of Jewelry, H.Samuel, Ernest Jones, Peoples and Piercing Pagoda, offering customers a range of shopping environments from suburban malls to high-street locations.

The company's product assortment encompasses engagement rings, wedding bands, fine fashion jewelry and timepieces, complemented by services including jewelry cleaning, repairs, appraisals and extended care plans.

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