The last thing a jewelry retailer needs is a severe snowstorm in the days leading up to Valentine's Day.

Unfortunately for specialty jewelry retailer Signet Group (NYSE:SIG), this nightmare became a reality as the Valentine's Day Blizzard dumped more than 3 feet of snow in some areas. The snowstorm and weak sales in the U.S. over Mother Day's weekend were two major factors that Signet had to overcome in its Q1 results reported on Friday. The retailer also was likely hampered by consumers feeling the pinch at the pump as noted by competitor Zale (NYSE:ZLC). These challenging conditions caused the retailer to experience a 7.5% decrease in gross profit from its year-ago quarter.

In its conference call, management sounded optimistic that clearer skies await the company. The stock is actually up 17.8% from a year ago and there are multiple positive aspects to owning this stock. For income investors, Signet has an impressive dividend yield of 3.3%, especially when compared with other jewelry retailers such as Tiffany (NYSE:TIF), Blue Nile (NYSE:NILE) and Zale. Tiffany's yield is 1%, whereas the other two do not pay dividends at all. An added plus to owning this stock is the geographic diversity of the company's retail operations. Approximately 25% of Signet's business comes from the U.K. Management noted that it saw a strengthened marketplace in the U.K. as an offset to the challenges faced by its U.S. operations during Q1.

Overall though, Signet did see a drop in operating profit despite a 10.9% increase in sales for its Q1 on a year-over-year basis. The company attributed the decline in operating profit to increased commodity costs and a slight decrease in gross margin.

Going forward, Signet shareholders can expect the retailer to continue to face resistance from higher commodity costs as well as rising gas prices that have accompanied an already generally challenging market for U.S. retailers. With that being said, Signet has two important trends specific to the jeweler's operations that will work in its favor to mitigate resistance and hopefully reap the benefits of the its plans to expand its U.S. store space by 8% to 10% during the fiscal year.

One trend is the 5% increase in average transaction value that the company experienced when comparing its 2007 Q1 to the prior year's Q1. The other trend crucial to the company's long-term success is the continued growth in Signet's Jared chain, which targets a wealthier clientele and typically sees average transaction value double that of Signet U.S. mall stores. Taken together, these developments will go a long way in melting away the icy conditions that this stock experienced in its Q1.

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Fool contributor Billy Fisher does not own shares of any of the companies mentioned. The Fool has a disclosure policy.