Signet Jewelers (SIG) Q2 2025 earnings summary

Executive summary

• Q2 FY25 sales were $1.5 billion, down 7.6% year-over-year, with same-store sales down 3.4% amid macroeconomic headwinds and pressured discretionary spending.

• Merchandise margin rate expanded 120 basis points and average transaction value increased, driven by strong fashion and lab diamond sales.

• Operating loss was $100.9 million, primarily due to $166 million in non-cash impairment charges related to digital banners, Blue Nile, and Diamonds Direct.

• Adjusted operating income was $68.6 million (4.6% of sales), with adjusted EPS at $1.25, both down from the prior year.

• Net loss attributable to common shareholders was $101.5 million, or $(2.28) per share.

Financial highlights

• Gross margin was $566 million (38% of sales), up 10 basis points year-over-year, reflecting improved merchandise margins.

• SG&A expenses were $498.4 million (33.4% of sales), up 170 basis points due to deleverage of fixed costs and higher advertising.

• Free cash flow for the first half was $(165.7) million, improved from $(308.7) million in the prior year.

• Cash and cash equivalents at quarter end were $403.1 million, with no outstanding debt and $1.2 billion available under the ABL facility.

• Inventory ended at $2.0 billion, down over 5% year-over-year; new product now 25% of core banner inventory.

Outlook and guidance

• FY25 sales guidance: $6.66 billion–$7.02 billion; same-store sales (4.5%) to +0.5%; adjusted operating income $590 million–$675 million; adjusted EBITDA $780 million–$865 million; adjusted diluted EPS $9.90–$11.52.

• Q3 revenue expected between $1.345 billion and $1.38 billion; same-store sales guidance of down 1% to up 1.5%; adjusted operating income $8–$25 million.

• Up to $200 million in cost savings initiatives for FY25; three-year savings target raised to $450 million.

• Capital expenditures expected at $160–$180 million; up to $1.1 billion allocated to debt, preferred share redemption, and share repurchases.

• Inventory flexibility allows for engagement unit range of down 5% to up 5% for the year; fashion performance expected to be materially better.