Dive Brief:
- Signet Jewelers reported a net profit of over $52 million after a net loss of over $9 million in the year-ago quarter. The company raised its fiscal 2027 guidance to reflect its first-half performance, according to a company press release.
- The retailer has redesigned the Jared and Kay websites and “early results are promising,” Signet CEO J.K. Symancyk said on a Wednesday call with analysts. The company will relaunch its Zales website later this month.
- The company also extended its consumer credit agreement with Bread Financial through 2035. The renewal includes a new profit-sharing agreement that is expected to generate over $1 billion for the company.
Dive Insight:
Signet is well-positioned entering the back half of the year and the holiday season.
“The quality of the quarter is what stands out,” Jefferies analysts led by Randal Konik said in a Wednesday note. The company delivered positive comps across every fine jewelry brand, average unit retail was up 6%, and cost discipline drove margins that were “well ahead of plan,” the analysts wrote.
During the quarter, same-store sales increased 2.2% year over year. Gross margin was $602.4 million, or over 39% of sales, up 80 basis points. The gross margin improvement reflected around $15 million of tariff refunds. Sales in Q2 were slightly down to $1.5 billion.
The company also redesigned the front-end experience for its three largest brands, two of which are currently live. As a result, the company has seen better customer engagement and an increase in average order value, according to executives. The updates include better imagery, realistic on-model presentations, easier navigation and the introduction of live video.
“All of those things bode well as you move into a critical time period, for that to be a bigger part of our business,” Symancyk said.
For its full-year outlook, the company increased its annual adjusted earnings per share guidance by 10% to reflect its operating performance, share repurchases, tariff refunds and the terms of its new consumer credit agreement, according to Chief Operating and Financial Officer Joan Hilson.
Total sales are projected to be $6.7 billion to $6.9 billion, as previously forecast, while same-store sales are now expected to be flat to up 2.5%, compared to its previous estimate of down nearly 1% to up 2.5%.
Meanwhile, the company expects $80 million in cash to be received in Q3 due to the signing of the agreement with Bread Financial. The company also expects an operating benefit over the next three years of between $200 million and $250 million.
The profit sharing will occur quarterly, and there is no loss sharing within the agreement.
“It’s a strong agreement,” Hilson said on a call with analysts, noting that profit-sharing ratios will increase over time.
