• Revenue: Down 6% year-over-year, but finished ahead of updated guidance.
• Same-Store Sales: Down 1.1%.
• Gross Margin: Adjusted gross margin of $1 billion or 42.6% of sales, down 70 basis points from last year.
• SG&A Expenses: Adjusted expense down $32 million to $638 million; SG&A rate up 30 basis points.
• Adjusted Operating Income: $356 million for the quarter.
• Adjusted EPS: $6.62, nearly in line with last year.
• Inventory: Ended the year at $1.9 billion, roughly flat to last year.
• Free Cash Flow: $438 million, approximately 88% cash conversion of adjusted operating income.
• Dividend: Quarterly dividend raised by 10% to $0.32 per share.
• Total Liquidity: Ended the year with $1.7 billion.
• Guidance - Q1 Sales: Expected between $1.5 billion to $1.53 billion.
• Guidance - Q1 Adjusted Operating Income: Expected between $48 million to $60 million.
• Guidance - FY Sales: Expected between $6.53 billion to $6.8 billion.
• Guidance - FY Adjusted Operating Income: Expected between $420 million to $510 million.
• Guidance - EPS: Expected in the range of $7.31 to $9.10 per diluted share.

• Warning! GuruFocus has detected 4 Warning Sign with SIG.

Release Date: March 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Signet Jewelers Ltd (NYSE:SIG) reported positive same-store sales in January and quarter-to-date, driven by quick adjustments in inventory and assortment gaps.
• The company is launching a transformative strategy called 'Grow Brand Love' to accelerate growth by focusing on brand loyalty, style innovation, and captivating customer experiences.
• Signet Jewelers Ltd (NYSE:SIG) plans to modernize its go-to-market strategy, creating clear brand distinctions and leveraging in-house design capabilities for faster market releases.
• The company is centralizing its sourcing practices to leverage buying power and improve agility, aiming for greater transparency and competitive pricing.
• Signet Jewelers Ltd (NYSE:SIG) is realigning its real estate portfolio, planning to close underperforming stores and reposition others to optimize sales transference and reduce mall revenue penetration.

Negative Points

• Revenue for the quarter was down 6% compared to last year, reflecting challenges in key gifting price points and a softer fashion performance.
• The company experienced a decline in same-store sales by 1.1%, with a larger gap due to the cycling of the 53rd week in the prior year.
• Adjusted gross margin decreased by 70 basis points, impacted by fixed cost leverage and year-end adjustments in digital brands.
• Signet Jewelers Ltd (NYSE:SIG) anticipates a measured consumer environment, with guidance reflecting potential variability in consumer spending.
• The company is undergoing a significant reorganization, including a 30% reduction in senior leadership, which may pose challenges in execution and transition.

Q & A Highlights

Q: Given the relative size of the opportunities of each segment, how do you think of the current mix of Bridal versus Fashion? Could you see this shifting over the next few years? A: J.K. Symancyk, CEO: It's not so much about penetration or mix but about delineating the growth of both. We see opportunities to grow share in Bridal by reinvigorating natural diamond penetration and modernizing assortments. For Fashion, lab-grown diamonds offer growth at lower price points, expanding our customer base and digital commerce opportunities.

Q: Are there any headwinds anticipated for same-store sales, and how are you thinking about the comp cadence for the rest of the year? A: Joan Hilson, CFO: We remain prudent and conservative in our outlook due to the dynamic consumer environment. While we're seeing positive trends in Bridal and Fashion, our guidance anticipates a measured consumer environment with variability in spending, and we don't expect a significant uptick as we approach the holiday season.

Q: What is the customer saying about lab-grown diamonds in engagement, and is there a risk of price declines affecting the business? A: J.K. Symancyk, CEO: Customers see a place for both natural and lab-grown diamonds. Lab-grown diamonds are more suited for Fashion due to price points and design capabilities. In engagement, natural diamonds are seeing a return to growth. We aim to educate consumers on the value of both, ensuring they feel confident in their purchases.

Q: What are your expectations for the engagement category at a market level this year, and how does the promotional environment affect AURs in Bridal and Fashion? A: Joan Hilson, CFO: We expect engagement to range from low single-digit growth to decline. AURs in Bridal are expected to be down low single digits to flat, while Fashion AURs may see growth due to lab-grown diamond inclusion. The promotional environment remains stable, with modest margin expansion driven by execution rather than changes in promotions.

Q: How do you see the Signet profit model evolving with the changes in process, and what is the expected flow-through on incremental sales? A: Joan Hilson, CFO: We anticipate $50 million to $60 million in cost savings, primarily in SG&A, offsetting incentive compensation resets. We aim for a 30% to 35% flow-through on increased comps, focusing on our largest brands like Kay, Zales, and Jared to maximize top-line impact and profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.