Signet Reveals Cautious Holiday Outlook Despite Q3 Gains

SIG -0.19%

Signet Jewelers — led by sales growth at its three largest brands, Zales, Kay and Jared — posted gains on the top and bottom lines for the third quarter.

Sales for the three months ended Nov. 1 hit $1.4 billion, up 3.1 percent from a year earlier. Same-store sales rose 3 percent.

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Net income increased to $20 million from $7 million in the year-ago period while adjusted operating income rose to $32 million from $16.2 million.

Average unit retail prices were up 7 percent including a 6 percent increase in bridal and an 8 percent uptick in fashion.

“We came in ahead of expectations. It was our third consecutive quarter of same-store sales growth,” said J.K. Symancyk, chief executive officer, in an interview witth WWD.

Symancyk said the positive results reflect momentum in the business and are a validation of the Signet’s “Grow, Brand, Love” strategy, which is focused on building stronger emotional connections with customers, raising profitability, filling voids in the merchandising and modernizing Jared, Kay and Zales. Signet also operates the James Allen, Blue Nile, H. Samuel, Ernest Jones, Peoples Jewellers and Banter by Piercing Pagoda brands.

For the holiday, “We are well positioned from an inventory perspective, particularly at key price points,” the CEO said, referring to items under $1,000 and under $500.

Unlike other retailers reporting sales gains for the Thanksgiving Day through Cyber Monday period, Symancyk said, “November has less of an impact on our quarter than others, particularly the apparel guys. But December is really important for us, especially, the last 10 days.”

Symancyk attributed part of quarter’s strength to the company’s efforts to fill merchandise gaps. “A year ago we failed on certain customer expectations at key price points, sub $500 and sub $1,000. We’ve increased our inventory postion five to eight times, particularly in lab-grown diamonds, in those two price point buckets, for the holiday period.”

He also said the company has done a nice job mitigating the impact of tariffs, reflected in margin gains. The gross margin rate grew 130 basis points to 37.3 percent, driven by gross merchandise margin expansion, services growth and leverage on fixed costs.

During his conference call with investors and retail analysts, Symancyk singled out strong growth by long standing brand collections like Vera Wang, Monique Lhuillier and Neil Lane.

“In fashion, Jared delivered 10 percent comp sales growth reflecting strong performance in diamond, gold and men’s jewelry, bolstered by strength of recent collections like Italia de Oro. Alongside that, we continue to see runway in the fashion category, particularly in lab-grown diamonds, which expanded penetration to 15 percent of fashion sales this quarter, roughly double last year’s rate.

“We are making progress on modernizing our playbook,” Symancyk said. “This includes a more robust, full-funnel media strategy, amplified social media and digital first-led content as well as brand ambassadors like Antonia Gentry and Chloe Fineman to drive buzzworthy campaigns.”

For all of 2025, Signet is forecasting $6.7 billion to $6.83 billion in sales, up a bit from a previous forecast of $6.67 billion to $6.82 billion. Adjusted earnings before interest, taxes, depreciation and amortization is seen at $650 million to $700 million, up from the previous forecast of from $630 million to $700 million.

Executives, taking a more measured outlook for the fourth quarter, are forecasting same-store sales ranging from down 5 percent to up 0.5 percent.

That cautious fourth-quarter outlook suggests a potential softening in consumer confidence and uncertainties regarding the state of the economy and recessionary concerns.

“We’re pretty cautious as it relates to [the fourth quarter],” Symancyk said during a conference call. “We saw a little bit of softness at the start of November. Our consumers are dealing with a lot.”

The softness is mostly being seen at Signet brands that cater especially to lower- and middle-income customers, whereas spending among higher income customers has been consistent through the year. The CEO said there was no call for pessimism on the outlook, but that it was appropriate to take a “guarded” approach looking ahead.

Wall Street apparently reacted to the cautious fourth-quarter outlook, pulling the stock price down 4.6 percent, or $4.37, to $91.32 by early afternoon trading Tuesday.

“There are three key takeaways I’d like to leave you with today,” Symancyk told analysts. “First, we delivered our third consecutive quarter of positive same-store sales and grew adjusted operating income double that of the third quarter of last year.

“Second, our efforts to expand merchandise margin are delivering meaningful and sustainable results that have worked to drive operating margin expansion and offset pressure from tariffs and commodity pricing.

“Third, we believe we’re well positioned for the holiday season with a focused assortment aligned to key categories and price points supported by a modernized marketing approach.”

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