Signet Jewelers Reports First Quarter Fiscal 2026 Results

Associated Press

03-06-2025

HAMILTON, Bermuda--(BUSINESS WIRE)--Jun 3, 2025--
Signet Jewelers Limited ('Signet' or the 'Company') (NYSE:SIG), the world's largest retailer of diamond jewelry, today announced its results for the 13 weeks ended May 3, 2025 ('first quarter Fiscal 2026').
'We delivered positive same store sales growth each month of the quarter, and into May, by bolstering our offerings at key price points and continuing the evolution of our assortment. Our three largest brands – Kay, Zales, and Jared – all saw sequential comp sales improvement from the fourth quarter on higher margins, highlighting the impact of our outsized focus on our larger brands,' said J.K. Symancyk, Chief Executive Officer. 'The Grow Brand Love strategy is gaining traction and our reorganization is substantially complete. While we're in the early innings of Grow Brand Love, our strategy is already driving growth in both Bridal and Fashion. I would like to thank the team for activating our strategy and delivering positive initial results.'
'Our refined promotional strategy and inventory management delivered both gross merchandise margin and adjusted operating margin expansion in the quarter with sales improvement outpacing inventory growth,' said Joan Hilson, Chief Operating and Financial Officer. 'Given our positive performance, we are increasing the low end and maintaining the high end of our Fiscal 2026 operating guidance. This outlook reflects the current macro environment and current tariffs as well as on track cost savings initiatives. Further, we are raising our adjusted EPS guidance to reflect the repurchase of more than 5% of outstanding shares year to date.'
First Quarter Fiscal 2026 Highlights:
First Quarter Fiscal 2026 Results:
Gross margin was $598.8 million, up approximately $26 million to Q1 of FY25. Gross margin rate grew 100 basis points to 38.8%, driven by gross merchandise margin expansion and leverage on fixed costs.
SG&A was $526.0 million, or 34.1% of sales, up from $515.4 million, and flat to Q1 of FY25 as a percentage of sales.
Operating income was $48.1 million, or 3.1% of sales, compared to $49.8 million, or 3.3% of sales, in Q1 of FY25. Adjusted operating income was $70.3 million, or 4.6% of sales, compared to $57.8 million, or 3.8% of sales, in Q1 of FY25.
The current quarter income tax expense was $12.1 million compared to $6.5 million in Q1 of FY25. Adjusted income tax expense was $17.6 million compared to $8.4 million in Q1 of FY25.
Diluted EPS was $0.78, up from a loss per share of $0.90 in Q1 of FY25. Diluted EPS in the current quarter includes $0.46 of restructuring charges. Adjusted diluted EPS was $1.18, compared to $1.11 in Q1 of FY25. Adjusted diluted EPS reflects higher adjusted operating income and lower diluted share count which was partially offset by a higher effective tax rate.
Balance Sheet and Statement of Cash Flows:
Cash used in operating activities was $175.3 million compared to $158.2 million in the prior year. Cash and cash equivalents were $264.1 million as of quarter end, compared to $729.3 million in Q1 of FY25 due to the retirement of convertible preferred shares and unsecured notes in FY25, as well as common share repurchases. Inventory ended the quarter at $2.0 billion, up approximately 1% to Q1 of FY25.
Capital Returns to Shareholders:
Signet's Board of Directors has declared a quarterly cash dividend on common shares of $0.32 per share for the second quarter of Fiscal 2026, payable August 22, 2025 to shareholders of record on July 25, 2025, with an ex-dividend date of July 25, 2025.
In the first quarter, Signet repurchased approximately 2.1 million common shares for $117.4 million through a combination of 10b5-1 plans and open market repurchases. Subsequent to quarter end, the Company has repurchased approximately 235 thousand additional shares for $15 million through June 2, 2025. The Company has nearly $600 million in share repurchase authorization remaining.
Second Quarter and Full Year Fiscal 2026 Guidance:
The Company's Fiscal 2026 guidance is based on the following assumptions:
Our Purpose and Sustainability:
We continue to make notable progress on our over-arching commitment to leave a positive legacy in all the global communities where we work, live, and have the privilege to serve. Signet's latest Corporate Citizenship & Sustainability Report, released this week, highlights our work in Fiscal 2025 to advance our Corporate Sustainability Goals through the lens of our Three Loves framework – Love for All People, Love for Our Team, and Love for Our Planet and Products. Highlights include surpassing $110 million in cumulative donations to St. Jude Children's Research Hospital ®, achieving higher employee retention than the US retail average, and making significant advancements in our environmental stewardship, including the launch of a measurable carbon reduction plan and installation of our first on-site renewable energy system.
Conference Call:
A conference call is scheduled for June 3, 2025 at 8:30 a.m. ET and a simultaneous audio webcast is available at www.signetjewelers.com.
The call details are:
Toll Free – North America [phone]
International All Other Locations: (Toll - Local - New York) – [phone]
Conference ID 90783
Registration for the listen-only webcast is available at the following link:
https://events.q4inc.com/attendee/390899932
A replay and transcript of the call will be posted on Signet's website as soon as they are available and will be accessible for one year.
About Signet and Safe Harbor Statement:
Signet Jewelers Limited is the world's largest retailer of diamond jewelry. As a Purpose-driven and sustainability-focused company, Signet is a participant in the United Nations Global Compact and adheres to its principles-based approach to responsible business. Signet operates approximately 2,600 stores primarily under the name brands of Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, Blue Nile, James Allen, Rocksbox, Peoples Jewellers, H. Samuel, and Ernest Jones. Further information on Signet is available at www.signetjewelers.com. See also www.kay.com, www.zales.com, www.jared.com, www.banter.com, www.diamondsdirect.com, www.bluenile.com, www.jamesallen.com, www.rocksbox.com, www.peoplesjewellers.com, www.hsamuel.co.uk, www.ernestjones.co.uk.
This release contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this document and include statements regarding, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. The use of the words 'guidance,' 'expects,' 'continue,' 'intends,' 'anticipates,' 'enhance,' 'estimates,' 'predicts,' 'believes,' 'should,' 'potential,' 'may,' 'preliminary,' 'forecast,' 'objective,' 'opportunity,' 'plan,' 'strategy,' 'target,' or 'will' and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties which could cause the actual results to not be realized, including, but not limited to: executing or optimizing major business or strategic initiatives, such as expansion of the services business or realizing the benefits of our restructuring plans or transformation strategies, including those that the Company may develop in the future; attracting and retaining key executive talent during periods of leadership transition, such as our recent appointment of a new CEO and other recent changes in senior leadership from the reorganization under our Grow Brand Love strategy; the failure to adequately mitigate the impact of existing tariffs and/or the imposition of additional duties, tariffs, taxes and other charges or other barriers to trade or impacts from trade relations; difficulty or delay in executing or integrating an acquisition; the impact of the conflicts in the Middle East on the operations of our quality control and technology centers in Israel; the negative impacts that public health crisis, disease outbreak, epidemic or pandemic has had, and could have in the future, on our business, financial condition, profitability and cash flows; risks relating to shifts in consumer spending away from the jewelry category or away from the cultural customs of expressing commitments through engagements and weddings; trends toward more experiential purchases such as travel; general economic or market conditions, including impacts of inflation or other pricing environment factors on our commodity costs (including diamonds) or other operating costs; a prolonged slowdown in the growth of the jewelry market or a recession in the overall economy; financial market risks; a decline in consumer discretionary spending or deterioration in consumer financial position; disruptions in our supply chain; our ability to attract and retain labor; changes to regulations relating to customer credit; disruption in the availability of credit for customers and customer inability to meet credit payment obligations, which has occurred and may continue to deteriorate; our ability to achieve the benefits related to the outsourcing of the credit portfolio, including due to technology disruptions and/or disruptions arising from changes to or termination of the relevant outsourcing agreements, as well as a potential increase in credit costs due to the current interest rate environment; deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in further impairments of long-lived assets or intangible assets or other adverse financial consequences; the volatility of our stock price; the impact of financial covenants, credit ratings or interest volatility on our ability to borrow; our ability to maintain adequate levels of liquidity for our cash needs, including debt obligations, payment of dividends, planned share repurchases (including execution of accelerated share repurchases and the payment of related excise taxes) and capital expenditures as well as the ability of our customers, suppliers and lenders to access sources of liquidity to provide for their own cash needs; potential regulatory changes; future legislative and regulatory requirements in the US and globally relating to climate change, including any new climate related disclosure or compliance requirements, such as those recently issued in the state of California; exchange rate fluctuations; the cost, availability of and demand for diamonds, gold and other precious metals, including any impact on the global market supply of diamonds due to the ongoing conflicts in the Middle East, the potential sale or divestiture of the De Beers Diamond Company and its diamond mining operations by parent company Anglo-American plc, and the ongoing Russia-Ukraine conflict or related sanctions; stakeholder reactions to disclosure regarding the source and use of certain minerals; scrutiny or detention of goods produced in certain territories resulting from trade restrictions; seasonality of our business; the merchandising, pricing and inventory policies followed by us and our ability to manage inventory levels; our relationships with suppliers including the ability to continue to utilize extended payment terms and the ability to obtain merchandise that customers wish to purchase; the level of competition and promotional activity in the jewelry sector; our ability to optimize our multi-year strategy to gain market share, expand and improve existing services, innovate and achieve sustainable, long-term growth; the maintenance and continued innovation of our OmniChannel retailing and ability to increase digital sales, as well as management of digital marketing costs; failure to anticipate and keep pace with changing fashion trends; changes in the costs, retail prices, supply and consumer acceptance of, and demand for gem quality lab-grown diamonds and adequate identification of the use of substitute products in our jewelry; ability to execute successful marketing programs and manage social media; the ability to optimize our real estate footprint, including operating in attractive trade areas and accounting for changes in consumer traffic in mall locations; the performance of and ability to recruit, train, motivate and retain qualified team members - particularly store associates in regions experiencing low unemployment rates; management of social, ethical and environmental risks; ability to deliver on our corporate sustainability goals or our environmental, social and governance goals; the reputation of Signet and its brands; inadequacy in and disruptions to internal controls and systems, including related to the migration to new information technology systems which impact financial reporting; risks associated with the Company's use of artificial intelligence; security breaches and other disruptions to our or our third-party providers' information technology infrastructure and databases; an adverse development in legal or regulatory proceedings or tax matters, including any new claims or litigation brought by employees, suppliers, consumers or shareholders, regulatory initiatives or investigations, and ongoing compliance with regulations and any consent orders or other legal or regulatory decisions; failure to comply with labor regulations; collective bargaining activity; changes in corporate taxation rates, laws, rules or practices in the US and other jurisdictions in which our subsidiaries are incorporated, including developments related to the tax treatment of companies engaged in internet commerce or deductions associated with payments to foreign related parties that are subject to a low effective tax rate; risks related to international laws and Signet being a Bermuda corporation; risks relating to the outcome of pending litigation; our ability to protect our intellectual property or assets including cash which could be affected by failure of a financial institution or conditions affecting the banking system and financial markets as a whole; changes in assumptions used in making accounting estimates relating to items such as extended service plans or asset impairments; or the impact of weather-related incidents, natural disasters, organized crime or theft, increased security costs, strikes, protests, riots or terrorism, or acts of war (including the ongoing Russia-Ukraine and conflicts in the Middle East).
For a discussion of these and other risks and uncertainties which could cause actual results to differ materially from those expressed in any forward looking statement, see the 'Risk Factors' and 'Forward-Looking Statements' sections of Signet's Fiscal 2025 Annual Report on Form 10-K filed with the SEC on March 19, 2025 and quarterly reports on Form 10-Q and the 'Safe Harbor Statements' in current reports on Form 8-K filed with the SEC. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.
Condensed Consolidated Statements of Operations (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited)
Operating income and adjusted operating income:
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On May 3, 2025, Signet operated 2,633 stores totaling 4.1 million square feet of selling space. Compared to year-end Fiscal 2025, store count decreased by 9 and square feet of selling space decreased 0.1%.
Non-GAAP Financial Measures
In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ('GAAP'), the Company reports certain financial measures on a non-GAAP basis. The Company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating historical trends and current period performance and liquidity. For these reasons, internal management reporting also includes these non-GAAP measures. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, the GAAP financial measures presented in this earnings release and the Company's condensed consolidated financial statements and other publicly filed reports. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.
The Company reports the following non-GAAP financial measures: sales changes on a constant currency basis, free cash flow, adjusted operating income, adjusted operating margin, adjusted diluted earnings per share ('EPS') and adjusted earnings before interest, income taxes, depreciation and amortization ('adjusted EBITDA').
The Company provides the year-over-year change in total sales excluding the impact of foreign currency fluctuations to provide transparency to performance and enhance investors' understanding of underlying business trends. The effect from foreign currency, calculated on a constant currency basis, is determined by applying current year average exchange rates to prior year sales in local currency.
Free cash flow is a non-GAAP measure defined as the net cash used in operating activities less capital expenditures. Management considers this metric to be helpful in understanding how the business is generating cash from its operating and investing activities that can be used to meet the financing needs of the business. Free cash flow is an indicator frequently used by management to evaluate its overall liquidity needs and determine appropriate capital allocation strategies. Free cash flow does not represent the residual cash flow available for discretionary purposes.
Adjusted operating income is a non-GAAP measure defined as operating income excluding the impact of certain items which management believes are not necessarily reflective of normal operational performance during a period. Management finds the information useful when analyzing operating results to appropriately evaluate the performance of the business without the impact of these certain items. Management believes the consideration of measures that exclude such items can assist in the comparison of operational performance in different periods which may or may not include such items. Management also utilizes adjusted operating margin, defined as adjusted operating income as a percentage of total sales, to further evaluate the effectiveness and efficiency of the Company's flexible operating model.
Adjusted diluted EPS is a non-GAAP measure defined as diluted EPS excluding the impact of certain items which management believes are not necessarily reflective of normal operational performance during a period. Management finds the information useful when analyzing financial results in order to appropriately evaluate the performance of the business without the impact of these certain items. In particular, management believes the consideration of measures that exclude such items can assist in the comparison of performance in different periods which may or may not include such items. The Company estimates the tax effect of all non-GAAP adjustments by applying a statutory tax rate to each item. The income tax items are used to estimate adjusted income tax expense and represent the discrete amount that affected the diluted EPS during the period.
Adjusted EBITDA is a non-GAAP measure, defined as earnings before interest, income taxes, depreciation and amortization, share-based compensation expense, non-operating expense, net and certain non-GAAP accounting adjustments. Adjusted EBITDA is considered an important indicator of operating performance as it excludes the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization costs and certain accounting adjustments.
The following information provides reconciliations of the most comparable financial measures calculated and presented in accordance with GAAP to presented non-GAAP financial measures.
Free cash flow
Adjusted operating income
North America segment adjusted operating income
International segment adjusted operating loss
Corporate and unallocated expenses adjusted operating loss
Adjusted income tax provision
Adjusted effective tax rate
Adjusted diluted EPS
Adjusted EBITDA
Footnotes to Non-GAAP Reconciliation Tables
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CONTACT: Investors:
Rob Ballew
Senior Vice President, Investor Relations & Capital Markets
[email protected]
or
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Media:
Colleen Rooney
Chief Corporate Affairs & Sustainability Officer
[phone]
[email protected]
KEYWORD: BERMUDA CARIBBEAN
INDUSTRY KEYWORD: RETAIL LUXURY OTHER RETAIL JEWELRY
SOURCE: Signet Jewelers Limited
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PUB: 06/03/2025 06:50 AM/DISC: 06/03/2025 06:48 AM
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