Signet Jewelers Posts 29% EPS Jump in Q2

Key Points

• Revenue increased 3.0% year over year to $1.54 billion in Q2 FY2026, coming in above company expectations.

• Adjusted diluted earnings per share climbed 28.8% compared to Q2 FY2025, reaching $1.61 (adjusted diluted EPS).

• The quarterly dividend was raised 10.3% to $0.32 per share compared to Q2 FY2025.

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Signet Jewelers (NYSE:SIG), the specialty jewelry retailer behind brands such as Kay, Zales, and Jared, reported its Q2 FY2026 earnings on September 2, 2025. The central news in this release: the company exceeded both its own guidance and market expectations for adjusted diluted EPS, posting GAAP revenue of $1.535 billion, up 3.0% from the year-ago period. Adjusted diluted earnings per share rose to $1.61, a 28.8% increase compared to Q2 FY2025. These numbers were ahead of the previously guided ranges, and marked a clear improvement against the comparable quarter last year. The quarter was defined by strong performance in core retail brands, margin gains, and continued cost discipline. Management also raised full-year guidance for both revenue and earnings, reflecting a more confident though still measured outlook moving into the rest of fiscal 2026.

Company Overview and Strategic Focus

Signet Jewelers operates one of the world’s largest collections of specialty jewelry retail brands. Its portfolio includes physical stores and digital banners, with core names like Kay, Zales, Jared, and digital-first brands such as James Allen and Blue Nile. The company focuses on both bridal jewelry (engagement, wedding rings) and fashion jewelry (worn for everyday or gifting), targeting mass-market consumers in North America and the UK.

Recently, it has emphasized a shift toward a brand‑centric strategy, investing heavily in digital transformation and integrated online‑and‑store experiences. The focus areas for Signet include building brand loyalty, expanding into gifting and fashion categories, improving operational efficiency, and upholding sustainability commitments. Success for the company depends on executing these strategies while adapting to consumer trends and competitive challenges.

Key Quarterly Developments and Financial Drivers

During Q2 FY2026, there were gains in revenue and profit margins, and same store sales increased 2.0% compared to Q2 FY2025. The revenue figure came in above the company’s own expectation, and same store sales improved by 5.4 percentage points compared to Q2 FY2025, reversing the decline seen in Q2 FY2025. Management attributed this result to a refreshed focus on trend-driven fashion assortments and smarter pricing strategies.

Core brands played a major role. Kay, Zales, and Jared together posted combined same store sales growth of 5%. This outperformance reflects the brand-centric “Grow Brand Love” strategy, which aims to deepen emotional loyalty with customers and keep stores relevant through exclusive designs and marketing campaigns. For example, management pointed to a 9% increase in average unit retail (AUR)—the average price per piece sold—driven by a 12% gain in the fashion segment and 4% in bridal jewelry. These higher AURs helped deliver better gross margins.

Cost control and efficiency improvements further boosted profitability. Selling, general, and administrative (SG&A) expenses grew slightly but improved as a percentage of sales, falling by 0.5 percentage points. The company highlighted cost savings from its ongoing corporate reorganization. This efficiency directly contributed to the adjusted operating margin climbing to 5.6%.

However, the quarter also saw non-cash impairment charges ($80 million worth) relating primarily to digital brands such as James Allen and Blue Nile. These were the main reason for a reported net loss on a GAAP basis. No new major digital launches or enhanced features were highlighted in the release, although the integration of digital touchpoints across the larger brick‑and‑mortar brands continues to be a focus. Free cash flow (non-GAAP) improved compared to last year but remained negative for the first half of FY2026, as capital returns—share buybacks and the raised dividend—outpaced operating cash flow.

Business Model and Strategic Context

Signet’s business relies on a combination of physical and online jewelry sales, with a large North American footprint and a smaller UK presence. It generates revenue from bridal and fashion segments, as well as repair and financial services such as credit programs. Recent priorities include advancing its “Grow Brand Love” platform (focused on exclusive collections and high‑profile marketing partnerships) and making the shopping experience more connected for customers across digital and physical channels.

Growth beyond bridal is a key theme. As consumer tastes shift, Signet is expanding into gifting and everyday wear—especially in the fashion jewelry category. The company’s investments in digital storefronts, virtual try-on experiences, and omnichannel fulfillment (such as “buy online, pick up in store”) aim to widen its customer base and keep pace with e-commerce competitors. At the same time, cost discipline remains core. Management is trimming underperforming stores—a net reduction of 19 stores since FY2025—and streamlining back-office operations to improve flexibility without sacrificing customer service. The company also maintains a board-level focus on environmental and social responsibility.

Looking Ahead: Guidance and Watch Items

For Q3 FY2026, management forecasts sales between $1.34 billion and $1.38 billion, and expects adjusted operating income (non-GAAP) between $3 million and $17 million, reflecting the seasonally slower nature of the third quarter. Full-year fiscal 2026 guidance was raised: revenue is now projected at $6.67 billion to $6.82 billion (up from $6.57 billion to $6.80 billion), with adjusted diluted earnings per share (non-GAAP) expected in a range of $8.04 to $9.57. The increase in guidance takes into account better-than-expected results so far, ongoing share repurchases, and the current consumer environment, but assumes continued cost control and successful execution of current strategies.

Looking forward, investors will be watching how Signet navigates ongoing tariff uncertainty relating to global jewelry sourcing—management indicated that profit outcomes could move toward the higher or lower end of the adjusted operating income range depending on trade developments. The performance of the digital segment remains a work in progress, especially after several quarters of impairment charges (GAAP, Q1 and Q2 FY2026). Other key areas to monitor will be the company’s ability to maintain margin gains while supporting both brand investments and operational efficiency. The recently raised dividend, now at $0.32 per share, signals management’s commitment to returning capital to shareholders.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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