Signet Jewelers (NYSE:SIG) reported fiscal 2027 second-quarter revenue of $1.5 billion, with same-store sales rising 2.2% and adjusted diluted earnings per share increasing 36% from the prior year. The company said comparable sales were positive in each month of the quarter, marking its fifth positive comparable-sales quarter in the past six quarters.
Chief Executive Officer J.K. Symancyk said the quarter reflected high-single-digit comparable-sales growth at price points above $2,000, including a strong Mother’s Day period. Average unit retail rose 6%, while performance improved across channels and categories including bridal, timepieces and services.
Margins Expand Despite Tariff and Gold-Cost Pressures
Adjusted gross margin was about $600 million in the quarter, with the gross-margin rate increasing 70 basis points. Merchandise margin increased 20 basis points, aided by approximately $13 million in refunds of tariffs previously paid. The refunds helped offset higher gold costs and a higher effective tariff rate flowing through the company’s inventory turns.
Chief Operating and Financial Officer Joan Hilson said the company’s tariff refunds did not fully offset the current-year impact of incremental tariffs. Signet expects about $30 million in tariff refunds for the full year, including $15 million recognized in the second quarter, primarily from direct refunds. It is not assuming a material benefit from indirect tariff refunds in fiscal 2027, though Hilson said such refunds could benefit fiscal 2028 at a similar or somewhat higher level than this year’s direct refunds.
SG&A expense declined $12 million year over year, producing a 60-basis-point improvement in the expense rate. Adjusted operating income increased 25% to $107 million, while adjusted operating-margin rate expanded 140 basis points.
Inventory ended the quarter at $2 billion, down 1% from a year earlier despite the impact of higher gold costs. Cash totaled approximately $525 million, up nearly $250 million year over year. The company said year-to-date free cash flow improved by more than $10 million, supported by inventory and vendor-payable management.
Bread Financial Agreement Adds Long-Term Profit Sharing
Signet announced an early renewal of its primary consumer-credit partnership with Bread Financial, extending the arrangement by seven years through December 2035. The new agreement includes profit sharing that Signet estimates will generate more than $1 billion in incremental non-comparable revenue and operating income over the agreement’s life.
Hilson said Signet expects to receive about $80 million in cash during the third quarter in connection with the agreement signing, which will be recognized ratably over the contract term. The company estimates the agreement will provide $200 million to $250 million in operating benefit over the next 36 months, with the benefit expected to increase later in the term as profit-sharing ratios rise.
The company expects $30 million to $40 million of non-comparable revenue and gross-margin benefit from the agreement this year, partly offset by higher incentive compensation. Hilson said the agreement contains no loss-sharing provision, and the credit portfolio will remain on Bread Financial’s balance sheet rather than Signet’s.
Signet also plans to offer Bread Financial credit to Blue Nile customers for the first time before the holiday season. Blue Nile, which is excluded from Signet’s comparable-sales calculation, delivered 10% sales growth in the quarter. The company plans to transition more Blue Nile showrooms into full-service stores with more on-hand merchandise and said it expects to announce a luxury partnership in coming weeks.
Brand, Digital and Holiday Initiatives
Symancyk said Signet is advancing its “Grow Brand Love” strategy through merchandise updates, marketing changes and improvements to its digital and store experiences. The company launched redesigned websites for Kay and Jared and expects to launch the redesigned Zales site later in September.
The redesigned sites feature new imagery, on-model photography, simplified navigation and curated shopping experiences intended to improve product discovery and customer confidence. Symancyk said early results from the Kay and Jared redesigns were promising, citing stronger engagement, higher average order values and greater interaction with product-display pages, though he did not provide specific figures.
Kay also introduced its “Love All In” campaign, designed to present a more authentic expression of love and expand the occasions and relationships represented by the brand. Signet reduced marketing spending during the quarter while increasing social-media impressions, including unpaid impressions, and said customer consideration rose at Kay, Zales and Jared.
Heading into the holiday season, management said it has added assortment flexibility across price points and worked with strategic vendors to respond more quickly to demand trends. The company expects promotional rates to remain consistent with its guidance and said it has built contingency plans while emphasizing value across its portfolio.
Guidance Raised and Capital Returns Accelerated
Signet raised its full-year same-store-sales outlook to a range of flat to up 2.5%, lifting the low end of its prior range by 75 basis points. It now expects adjusted operating income of $535 million to $605 million, an increase of nearly $50 million at the midpoint. The company said its adjusted EPS guidance rose by more than 10%, reflecting first-half performance, credit-agreement economics, tariff refunds and additional share repurchases.
For the third quarter, Signet expects same-store sales to range from down 1% to up 2%, with adjusted operating income of $31 million to $48 million. The company expects $7 million to $9 million of tariff-refund benefit and $12 million to $16 million of credit-agreement benefit in the quarter.
Signet increased its share-repurchase authorization by nearly $400 million and intends to initiate a $125 million accelerated share repurchase program during the month. After completing that program, the company expects to have $575 million remaining under its authorization and to have repurchased approximately $325 million of shares year to date. Including dividends, Hilson said Signet expects to have returned 12% of its recent market capitalization to shareholders during the first nine months of the fiscal year.
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.
