Signet Jewelers (SIG 3.12%) reported its fiscal 2026 first-quarter earnings on June 3, 2025, posting $1.5 billion in revenue, 2.5% same-store sales growth, and adjusted operating income growth of 22% year over year. Both same-store sales growth and adjusted operating income exceeded management's guidance. The quarter was marked by strong growth in lab-grown diamond (LGD) categories, double-digit e-commerce expansion in the company's three largest banners, and continued execution on the Grow Brand Love strategy.

Rapid Execution of Grow Brand Love Drives Outperformance

The company's foundational strategic overhaul, focused on brand differentiation and organizational alignment, enabled a balanced uplift across fashion and bridal segments. Fashion category same-store sales showed a sequential improvement of approximately four percentage points versus the prior quarter, and new product penetration increased eight percentage points while roughly maintaining inventory levels.

"I'd like to open my remarks today with a thanks to our team. Your dedication is delivering results, including both same-store sales and operating income growth above our guidance range. … Our quick actions delivered results ahead of our first quarter expectations with both same-store sales and adjusted operating income growth."
— J.K. Symancyk, Chief Executive Officer

Demonstrable improvement in both top- and bottom-line metrics indicates that the company’s ongoing brand-centric realignment is driving tangible commercial outcomes, reinforcing credibility in management’s ability to execute systematic transformation.

Lab-Grown Diamonds Fuel Category Growth and Margin Expansion

Lab-grown diamond penetration rose to roughly 20% of total sales, up about five percentage points compared to the prior year, with LGD fashion sales surging 60% and carrying more than double the average unit retail (AUR) of other fashion pieces. Bridal LGD reached a mid-30% share, supported by active assortment optimization and targeting of key price segments.

"Lab-grown diamond or LGD fashion growth of 60% this quarter was supported by the introduction of new product which led to notable AUR improvement. We continue to see significant runway for LGD fashion growth."
— J.K. Symancyk, Chief Executive Officer

Ongoing LGD momentum leverages a growing category with outsized gross margin contribution, offering an ongoing lever for mix improvement and competitive differentiation as consumer acceptance broadens.

Cost Controls, Share Repurchases, and Real Estate Optimization Strengthen Shareholder Value

Gross margin expanded 100 basis points, driven by promotional discipline and inventory management; Adjusted operating income exceeded $70 million, while the company completed aggressive buybacks of 2.3 million shares year to date (over 5% of shares outstanding repurchased year to date), with $600 million authorization remaining. Progress was also made on the company’s four-pronged store portfolio strategy, including 14 store closures, approximately 40 store renovations during the quarter, and a multi-year plan to reduce mall exposure to 30% of North American sales over the next few years.

"Our liquidity position enabled us to take advantage of the pullback in share price this year by more aggressively repurchasing shares. With approximately 2.3 million shares repurchased year to date or over 5% of shares outstanding. We have approximately $600 million of authorization remaining."
— Joan Hilson, Chief Financial and Operations Officer

Capital allocation discipline, ongoing footprint rationalization, and buyback acceleration position the company to drive further EPS accretion and efficiency improvements amid a changing retail landscape.

Looking Ahead

For Q2 FY2026, management guides total sales of $1.47 billion to $1.51 billion and same-store sales ranging from down 1.5% to up 1%, with gross margin expected to be flat or up modestly, and adjusted operating income projected between $53 million and $73 million. Full-year guidance was raised on the low end, now targeting revenue between $6.57 billion and $6.8 billion, same-store sales ranging from down 2% to up 1.5%, and adjusted EPS of $7.70 to $9.38, with capex expected at $145 million to $160 million. Gross merchandise margin expansion is forecast to offset tariff and SG&A pressures, while store optimization and key digital brand action remain priorities.