Signet Jewelers boosts FY27 outlook on Q2 profit beat

Signet Jewelers Limited shares surged 24% following the release of second-quarter fiscal 2027 results that exceeded market expectations. The company delivered adjusted earnings per share of $2.19, significantly outpacing the Zacks Consensus Estimate of $1.69 and rising 36% from the $1.61 reported in the same period last year. GAAP earnings also swung to a profit of $1.33 per share, reversing a loss of 22 cents a year earlier, as reported by GN markets/earnings (en-US).

Revenue came in at $1,528.1 million, slightly below the consensus estimate of $1,529 million and down 0.5% year over year. The modest top-line decline was attributed to the exclusion of James Allen and Blue Nile from same-store sales calculations, a change that began this quarter. Despite the revenue miss, same-store sales grew 2.2%, marking the fifth positive quarter in the last six, while average merchandise unit retail prices increased by approximately 6%.

Margin expansion driven by cost discipline

Profitability improved substantially, with adjusted operating income climbing 25.5% to $107.2 million from $85.4 million in the prior-year quarter. Gross profit rose 1.8% to $602.4 million, expanding the gross margin by 80 basis points to 39.4%. This improvement was supported by roughly $15 million in tariff refunds, which exceeded management’s expectations by $13 million, alongside lower inventory and distribution costs.

Selling, general, and administrative expenses decreased 2.3% year over year to $493.6 million. As a percentage of sales, these costs improved by 60 basis points to 32.3%, reflecting operational efficiencies and spending discipline. The company noted that higher gold costs partially offset the benefits from tariff refunds and operational savings, though the net result was a stronger bottom line.

Demand shifts favor higher price points

Consumer behavior remained skewed toward premium merchandise, with comparable sales at price points above $2,000 growing at a high-single-digit rate. Timepieces delivered nearly double-digit comparable sales growth, while bridal segments posted low-single-digit increases. Conversely, fashion jewelry comps declined 1%, driven by weakness in lower-priced, metal-focused merchandise and the Banter brand, which was partly offset by growth in middle and higher price brackets.

Digital restructuring impacts e-commerce sales

E-commerce sales fell 5.5% to $300 million, representing 19.6% of total quarterly revenue compared to 20.7% a year earlier. This decline was primarily linked to the decommissioning of the James Allen website as the brand transitions into a proprietary collection within Blue Nile. Blue Nile sales increased 11.9% to $83.6 million, while James Allen sales dropped to $7.1 million from $36.9 million due to this strategic shift.