Signet Jewelers’ Q2 Sales Fall 8%

Akron, Ohio—Signet Jewelers Ltd. sales continued to decline in the second quarter, but it’s seeing brighter days ahead.

The jewelry giant, which is the parent company of several large jewelry store chains including Zales, Jared, and Kay Jewelers, reiterated its prediction that the number of engagements will rise in the near future, following a post-pandemic slump.

“Both the internal and external metrics we track indicate increasing engagements as we head into the back-half of the year,” said Signet Jewelers CEO Virginia C. Drosos in a statement.

Signet’s previously shared data showed engagements occur within three years of a couple dating, but they have been happening less frequently in the wake of the COVID-19 pandemic, which limited people’s ability to connect.

The company previously forecast a rebound in engagements in fiscal 2025, Signet’s current fiscal year. Its current guidance assumes engagements will rise up to 5 percent this year.

On a Q1 earnings call, the company forecast a rise of 5 to 10 percent in engagements.

For the quarter ending Aug. 3, Signet’s overall sales totaled $1.5 billion, down 8 percent year-over-year. Same-store sales fell 3 percent, in line with its prior guidance for the quarter.

Drosos noted the company reported its fifth consecutive quarter of sequential same-store sales improvement.

On an earnings call Thursday morning, Drosos said, “same-store sales improved to a low-single-digit decline in the second quarter led by an acceleration in fashion but also with improvement in bridal and continued strength in services.”

“We continue to focus on new, innovative, and on-trend pieces. This is a proven strategy for us in tougher macroenvironments and there's been a strong response from customers.”

In the first half, sales totaled $3 billion, down 9 percent year-over-year. Same-store sales fell 6 percent.

In North America, Signet’s banners include Zales and Kay Jewelers, as well as Peoples in Canada.

Signet’s second-quarter sales in the region totaled $1.4 billion, down 7 percent year-over-year, due to a 2 percent increase in average transaction value (ATV) on a lower number of transactions. Same-store sales in the region were down 4 percent.

Signet’s international banners include Ernest Jones and H. Samuel.

International quarterly sales totaled $86.5 million, down 15 percent year-over-year (16 percent on a constant currency basis), due to a 14 percent decrease in ATV on a lower number of transactions.

International same-store sales were up 2 percent in the quarter.

In recent quarters, the company noted integration issues at its digital banners, which had led to fulfillment issues, but said it was working to resolve them.

In Q2, the issues contributed to an operating loss of $100.9 million, or 7 percent of sales.

“The impairment of the digital banners was substantially caused by the ongoing challenges from the Blue Nile integration, the lag in engagement recovery, and to a much lesser degree, impacts from market declines in lab-created diamond pricing,” said the company.

Chief Financial, Strategy, and Services Officer Joan Hilson shared insight on the quarter and the year ahead.

“Our strategy of balancing new merchandise, competitive pricing, and sourcing savings drove merchandise margin expansion of 120 basis points and an increase in average transaction value compared to this time last year,” said Hilson.

“In addition to continuing this strategy, our fiscal year guidance includes an increase in cost savings, now up to $200 million for the year, which we believe provides for flexibility in a competitive environment in the back-half."

Looking to the year ahead, Signet reaffirmed its guidance, expecting fiscal 2025 sales of $6.66 billion to $7.02 billion, with same-store sales ranging from down 5 percent to up 1 percent.

In the third quarter, the company expects sales between $1.35 billion and $1.38 billion, with same-store sales between a 1 percent dip and a 2 percent increase.