Signet Jewelers shares soar as retailer lifts profit outlook on cost discipline

Signet Jewelers Limited, a major jewelry retailer, has boosted its full-year profit forecast after surpassing Wall Street estimates in its second-quarter earnings. The company's adjusted earnings per share (EPS) for the quarter came in at $2.19, significantly exceeding the analysts' estimate of $1.74. Moreover, this marked a 36% increase from the previous year. Signet's adjusted operating income also outperformed expectations, reaching $107.2 million, which is 26% higher compared to the prior year.

While revenue remained flat at $1.5 billion compared to the previous year's $1.53 billion, same-store sales managed to grow by 2.2%. The expansion of gross margin by 80 basis points to 39.4% and an impressive rise of 140 basis points in adjusted operating margin to 7% contributed to these impressive results. Signet's segment revenue was divided between $1.4 billion from North America and $96.6 million from international markets.

Looking ahead to fiscal 2027, the company has raised its adjusted EPS guidance to a range of $10.45 to $12.15, up from its earlier forecast of $9.20 to $11, and the analysts now expect $10.82. Similarly, Signet has adjusted its operating income guidance to a range of $535 million to $605 million, a boost from the previous $480 million to $560 million, and expanded its adjusted EBITDA outlook to $730 million to $800 million, up from the previous range of $665 million to $745 million.

In response to these impressive quarterly results, analysts at Jefferies praised the quality of the earnings, highlighting positive comparable sales across all fine jewelry brands, a 6% increase in average unit retail, and the company's commendable cost discipline, which propelled EBITDA and margins beyond expectations. The brokerage firm maintains a "Buy" rating on the stock, praising the retailer's self-help initiatives, capital returns, and improving brand momentum.

Furthermore, the company's raised guidance, expanded buyback program, and a new long-dated credit partnership are expected to pave the way for a confident run into the holiday season.