Signet Jewelers posts $52M profit, beats EPS estimates

Signet Jewelers reported second-quarter net profit of more than $52 million, reversing a net loss of over $9 million a year earlier. The parent of Kay Jewelers, Zales, and Jared also extended its consumer credit partnership with Bread Financial through 2035, a deal the company said includes new profit-sharing terms expected to make more than $1 billion in incremental value over time.

Adjusted earnings per share came in at $2.19, beating analyst estimates of $1.72 by a wide margin. Shares rose as much as 24% in trading on the news. Management raised full-year adjusted EPS guidance to $10.45-$12.15, up from the previous $9.20-$11.00 range. The company also announced a $125 million accelerated share repurchase program to return capital to shareholders.

Margin expansion drives the print

The earnings beat stems largely from margin improvement rather than top-line acceleration. Second-quarter sales declined slightly to $1.53 billion, yet adjusted operating margin expanded 140 basis points to 7%. Same-store sales increased 2.2%, beating Wall Street's 1.9% expectation, with positive comparable sales reported across all three months of the quarter. Performance improved across Kay, Zales, Jared, and Blue Nile, indicating the recovery extends beyond a single brand.

However, demand remains uneven. Fashion jewelry sales declined 1%, with weakness particularly evident at Banter and in lower-priced metal pieces. Bridal and timepiece sales provided greater support, leaving the company more dependent on higher-ticket categories. Signet maintained its full-year revenue guidance of $6.7 billion-$6.9 billion while narrowing its comparable-sales outlook to flat to up 2.5%.

Positioning and forward risks

Hedge fund interest in the stock has cooled. The hedge fund count fell to 29 in the second quarter from 32 in the first, with position value declining to $534.6 million from $579.4 million, according to Insider Monkey's database. In contrast, Movado Group saw holders rise to 25 from 20, with position value increasing to $91.2 million from $66.0 million.

The setup from here hinges on whether margin gains can sustain earnings growth without stronger revenue. Tariffs, gold prices, and the seasonal holiday period could pressure merchandise margins. Investors are watching for broad-based demand recovery across the jewelry portfolio to validate the higher EPS forecast.