Updated 4:50 p.m. ET March 19
Signet Jewelers, operator of the Jared, Kay, Zales and Blue Nile jewelry brands, boosted profitability in the fourth quarter despite higher costs and tariffs.
And investors liked what they saw, sending shares of Signet up 13.7 percent to $89.56 on Thursday.
In the fourth quarter ended Jan. 31, operating income rose to $318.3 million, up from $152.6 million in the year-ago quarter. Adjusted operating income dipped to $327.3 million, down from $355.5 million. Net income reached $250 million, an increase from $100.6 million.
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There was a 30 basis point decrease in merchandise margins due to higher commodity costs and tariffs, partially offset by assortment architecture, pricing and growth in services. However, cost reductions allowed Signet to hit $327 million in adjusted operating income for the quarter, putting it at the high end of its guidance.
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Sales of $2.35 billion were virtually flat. Same-store sales, which include e-commerce, decreased 0.7 percent.
The average unit retail price was up about 5 percent, largely due to gold price increases, and growth in both the bridal and fashion categories carrying higher price points, the company indicated.
Diluted earnings per share were $6.08, compared to $2.30 in the year-ago period, but adjusted diluted earnings per share of $6.25, compared to $6.62 in the year-ago quarter.
Signet is undergoing major transformation through its ongoing “Grow Brand Love” strategy introduced a year ago and involving efforts to differentiate the four core brands in the portfolio — Kay, Zales, Jared and Blue Nile — bring greater style and design-led items to the assortments and pump up bridal jewelry. Signet has been centralizing certain functions and consolidating some brands in pursuit of operating efficiencies and greater agility. The four core brands account for approximately 70 percent of Signet’s total volume.
Blue Nile is undergoing a major repositioning to offer elevated luxury anchored in natural diamonds. “Blue Nile will distinguish itself at the highest end of the Signet portfolio,” Joan Hilson, chief operating and financial officer, told WWD on Thursday, when Signet issued its fourth-quarter and year-end results. “This will expand our reach to higher-income households while having accessibility and upscaling the level of service. We expect to relaunch Blue Nile later this year.” Blue Nile has 20 showrooms in high performing malls, and an e-commerce site.
In terms of transformation, Hilson said: “We simplified our operating model and shifted to a brand mindset. We are starting our second year of Grow Brand Love with positive comp momentum, and sharpening our focus on brand differentiation and consolidating some of our brands.”
She also said the company has been centralizing some functions into shared services, including putting Blue Nile’s digital technology under the central technology team. Through these actions, Signet saved $60 million last year, and expects to save $40 million this year. Among the maneuvers, James Allen will become a proprietary brand within the Blue Nile website and jamesallen.com will be discontinued in the second quarter. The Rocksbox private label fashion assortment will become a proprietary collection within Kay.
Signet did consider selling its H. Samuels, Ernest Jones and Peoples brands overseas, but has determined that the price tag and tax implications of a sale wouldn’t be worth it. Moreover, “All three brands are performing nicely and self-sustaining,” Hilson said.
Banter, on the low-priced side of the Signet portfolio, is under evaluation, with different alternatives for its future being considered. “Banter is performing nicely. It’s capital light and profitable,” Hilson said.
J.K. Symancyk, chief executive officer, said in a statement: “Fiscal year 2026 delivered over a point of comp growth driven by heightened focus on our three largest brands — Kay, Zales and Jared. Building on that momentum, fiscal year 2027 will focus on accelerating core performance through sharper brand differentiation, broader customer reach, and a more seamless in‑store and digital experience. As we continue to advance our Grow Brand Love strategy into its second year, we expect to further strengthen our foundation for sustainable long‑term growth and drive increased shareholder value.”
In a conference with analysts, Symancyk added, “The team’s focus on cost management as well as leveraging value engineering, vendor relationships and country of origin pivots have delivered adjusted operating income growth even as we digest a reset to short-term incentive compensation, record gold prices and elevated tariffs.
“Turning to fiscal ’27, sales momentum continued into the year with a positive Valentine’s Day performance, which has continued quarter-to-date. This momentum leads me to my next key takeaway. Our Grow Brand Love imperatives will evolve in Year Two of our strategy. The first year of Grow Brand Love returned the business to growth, a result we look to amplify.”
The CEO cited several priorities for 2026 including strengthening brand positioning, improving inventory turns, managing tariff impact and commodity volatility, enhancing the pricing architecture and taking “strategic real estate actions.”
In addition, “Signet is stepping up store renovations to touch 30 percent more stores this year, equating to nearly 10 percent of the fleet with a particular focus on brands and markets that represent the best opportunities,” Symancyk said. About 200 renovations, up to 20 repositions, and up to 10 store openings are planned.
The Kay, Zales and Jared websites will be redesigned to “provide customers with a more curated selection informed by their behavior with improved navigation,” the CEO said. “Our site refresh will better align to a purchase journey that is emotional and highly considered through more intuitive features and design, enhanced product discovery and improved storytelling. We expect this to be complete by the third quarter to take full advantage of the holiday shopping season.”
Looking forward to this year, the company’s guidance range included top line growth and margin expansion at the high end.
During the call, Hilson said that the merchandise margin rate for the year will be relatively flat though the impact of tariffs and commodity increases will be lower than the headwind mitigated last year. “We also have a longer lead time to address these headwinds with the following actions: select pricing actions related to commodities, reduced off-holiday discounting, increased LGD mix, assortment architecture and to a lesser degree, benefits from gold hedges.”
For fiscal 2027, the company projects sales of $6.6 billion to $6.9 billion, same-store sales from down 1.25 percent to up 2.5 percent, adjusted operating income of $470 million to $560 million, and adjusted diluted earnings per share of $8.80 to $10.74.
Signet operates about 2,600 stores primarily under the name brands of Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, Blue Nile, James Allen, Rocksbox, Peoples Jewellers, H. Samuel, and Ernest Jones.