Signet Jewelers Limited Q4 FY2026 earnings call

JK Simensek thanked the Signet team for their agility and commitment. Key takeaways include delivering at or above adjusted operating income and EPS guidance amidst challenges while generating more free cash flow. Fiscal 27 will focus on accelerating core performance through sharper brand differentiation, broader customer reach, and a more seamless in-store and digital experience. Looked back on first year of Grow Brand Love with heightened focus on Kay, Zales, and Jared driving positive same-store sales. Outlined updates to Grow Brand Love imperatives: shifting to brand mindset, focusing on core to expand into adjacencies, and restructuring operating model. Drilled in on shaping distinct brands, sharpening go-to-market strategy for key brands, redesigning websites, accelerating store renovations, focusing on product design and assortment, and transforming marketing approach. Joan Hilsen commented on portfolio review, unlocking portfolio value, evolving Blue Nile, sunsetting jamesallen.com, positioning Roxbox within Kay, and fleet optimization.

Revenue for the quarter was $2.3 billion with a comp decrease of 0.7%. Excluding James Allen and the net impact of weather, comps grew 1%. By category, this quarter's results reflect mid-single-digit comp growth in services and low single-digit declines in bridal and fashion. AUR grew 5% up in all categories. Gross margin was approximately $1 billion, down roughly 60 basis points. Cost reductions allowed to achieve the high end of adjusted operating income guidance of $327 million for the quarter. For full year fiscal 26, comp sales grew 1.3% Gross margin expanded 30 basis points and adjusted operating income grew to $515 million while delivering 7% adjusted diluted EPS growth. Inventory ended the quarter flat to last year at $1.9 billion. Cash ended the quarter at $875 million with total liquidity of roughly $2 billion and an undrawn ABL. Free cash flow for the year was approximately $525 million, up 20% to last year. Repurchased $205 million or more than 3 million shares in fiscal 26 at an average purchase price of roughly $66.

For full year, expect comp sales range to be down 1.25% to up 2.5% with total revenue between $6.6 and $6.9 billion. Impacted by $60 to $80 million of lost sales from James Allen transition. Exclude digital brands from Q2-Q4 comp sales reporting. Anticipate merchandise margin rate relatively flat at midpoint. Expect adjusted operating income between $470 and $560 million. Expect adjusted EPS between $8.80 and $10.74 per share. For first quarter, expect comp sales range to be up 0.5% to 2.5%. with adjusted operating income between 66 and $77 million. Expect merchandise margins to be somewhat lower in first quarter, generally offset by leverage in SG&A.

Q: Paul LeJouet from Citigroup asked about gross margin headwinds and tailwinds, learnings from holiday and Valentine's Day, and tariff assumptions.

A: GMM rate midpoint flat, first quarter more pressure, back half neutralize. Holiday and Valentine's Day had consumer softness in November, positive momentum in peak periods, learned about assortment focus. Tariff and commodity increases lower than last year.

Q: Lorraine Hutchinson from Bank of America asked about lab-grown diamond business performance, pricing, and outlook.

A: Lab-grown diamond fashion grows at higher rate, pricing stable, penetration in fashion and bridal discussed.

Q: Randy Koenig from Jefferies asked about liquidity, share repurchases, free cash flow, and SKU productivity.

A: $2 billion liquidity, continue share repurchases, see no impediments to free cash flow generation, talk about SKU rationalization and inventory turnover.

Q: Ike Boruchow from Wells Fargo asked about merch margin in fourth quarter and first quarter, and revenue impact of removing Blue Nile and sunsetting James Allen.

A: Q4 merch margin affected by promotion and tariff, first quarter similar, revenue impact of James Allen and Blue Nile transition discussed.

Q: Jeff Lick from Stevens asked about EBITDA model and SG&A, and inventory turnover impact on free cash flow.

A: Model leverages SG&A, teams aligned, inventory turnover impact on free cash flow.

Q: John Keepor from Goldman Sachs asked about sourcing from UAE and impact on cost of crude, and sales performance of big three.

A: No impact from sourcing disruption, sales performance of big three discussed with learnings from Q4.

Q: Mauricio Serna from UBS Financial asked about quarter to date performance, bridal vs fashion growth, AUR vs unit growth, and promotions impact on merch margin.

A: Good start to first quarter, bridal and fashion comps, AUR and unit growth, promotions impact on merch margin.

Q: Jim Sanderson from North Coast Research asked about bridal category units and AUR, real estate portfolio strategy impact on revenue, and M&A philosophy.

A: Bridal category units and AUR expectations, real estate strategy impact on revenue, no change in M&A philosophy