A month has gone by since the last earnings report for Signet (SIG). Shares have lost about 0.8% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Signet due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
SIG Beats Q1 Earnings Estimates on Comps Growth, Raises FY27 View
Signet posted first-quarter fiscal 2027 results, wherein the bottom line beat the Zacks Consensus Estimate, while the top line marginally missed. Sales increased year over year, supported by positive same-store sales growth and strength across the Bridal and Fashion categories. Encouraged by strong fiscal first-quarter execution and positive trends entering the second quarter, management raised its fiscal 2027 adjusted EPS outlook and increased the midpoint of its sales and profitability guidance.
More on Signet’s Q1 Results
SIG reported adjusted earnings of $1.56 per share in the first quarter of fiscal 2027, surpassing the Zacks Consensus Estimate of $1.32. The bottom line increased 32.2% from adjusted earnings of $1.18 in the year-ago period, benefiting from higher adjusted operating income, a lower diluted share count and higher interest income.
This jewelry retailer generated total sales of $1,553.6 million, slightly missing the consensus estimate of $1,558 million. However, the top line increased 0.8% year over year. Same-store sales grew 1.8%, while merchandise average unit retail rose approximately 5% from the prior-year quarter, driven by growth in the Bridal and Fashion categories.
Insight Into SIG’s Margins & Expenses
Gross profit in the first quarter of fiscal 2027 totaled $556.5 million, down 7.1% from $598.8 million in the year-ago quarter. The gross margin contracted 310 basis points year over year to 35.8%, primarily reflecting inventory write-downs related to the transition of the James Allen brand. Adjusted gross profit was $589.2 million, down 1.6% year over year. We note that, adjusted gross margin of 37.9%, down 90 basis points year over year.
Selling, general and administrative (SG&A) expenses were $509.6 million, down 3.1% from $526 million in the prior-year quarter. As a percentage of sales, SG&A expenses improved 130 basis points year over year to 32.8%, benefiting from cost-reduction initiatives implemented in fiscal 2026 and leverage from higher sales.
SIG reported adjusted operating income of $78.6 million, up 11.8% from $70.3 million in the year-ago quarter. The adjusted operating margin expanded 50 basis points year over year to 5.1%.
Adjusted EBITDA amounted to $120.8 million, increasing 6.2% from $113.8 million in the prior-year quarter. The adjusted EBITDA margin improved approximately 40 basis points year over year to 7.8% in the quarter under review.
Update on Signet’s Segmental Performance
Sales in the North America segment increased 0.9% year over year to $1.46 billion in the first quarter of fiscal 2027. Same-store sales grew 1.6%. The segment’s adjusted operating income increased to $101.4 million from $97.1 million in the prior-year quarter, with the adjusted operating margin expanding to 6.9% from 6.7%.
Sales in the International segment increased 9.2% year over year to $87.5 million. Same-store sales rose 5.6%, while sales increased 4.8% on a constant-currency basis. The segment reported an adjusted operating loss of $6.6 million compared with a loss of $7 million in the year-ago quarter.
Update on SIG's Stores
As of May 2, 2026, Signet operated 2,559 stores across its portfolio, representing a net reduction of 23 stores from the end of fiscal 2026. The North America segment operated 2,308 stores after 21 closures during the quarter, while the International segment operated 251 stores following two closures. Total selling space declined 0.4% sequentially to approximately 4 million square feet.
Signet’s Financial Snapshot: Cash, Debt & Equity Overview
SIG ended the first quarter of fiscal 2027 with cash and cash equivalents of $602.8 million compared with $264.1 million in the year-ago period. Inventory totaled approximately $2 billion, remaining essentially flat year over year. Meanwhile, total liquidity reached $1.7 billion, an increase of more than $300 million from the prior-year period. Shareholders’ equity stood at $1.90 billion at the quarter-end.
During the quarter, net cash used in operating activities was $144.7 million, an improvement from the cash use of $175.3 million in the prior-year period. Capital expenditure totaled $24.5 million during the quarter as the company continued investing in strategic growth initiatives and store-optimization efforts.
Signet remained active in returning capital to shareholders. The company repurchased 0.9 million shares for $83 million during the quarter and additional 0.4 million shares for roughly $30 million after the quarter-end. Management also announced plans to initiate a $50-million accelerated share repurchase program, which would leave approximately $355 million available under the existing authorization upon completion.
The company’s board declared a quarterly cash dividend of 35 cents per share, payable Aug. 21, 2026, to shareholders of record as of July 24, 2026. Signet noted that its strong cash generation, inventory discipline and balance-sheet strength continue to support growth investments and shareholder returns.
SIG’s Q2 Guidance
For the second quarter of fiscal 2027, Signet expects total sales of $1.50-$1.53 billion. Same-store sales are projected to increase 0.5-2.5% year over year. Adjusted operating income is expected between $79 million and $93 million, while adjusted EBITDA is projected to be $125-$139 million.
What to Expect From Signet in FY27?
Following its strong fiscal first-quarter performance, SIG raised portions of its fiscal 2027 outlook. The company expects total sales of $6.7-$6.9 billion compared with the prior mentioned $6.6-$6.9 billion. Same-store sales are projected to range from a decline of 0.75% to growth of 2.5%, an improvement from the previously stated 1.25% decline to 2.5% growth. Management expects a $60-$80 million reduction in revenues related to the transition of the James Allen brand, though with minimal impact on adjusted operating income.
The company anticipates adjusted operating income of $480-$560 million, up from the previously mentioned $470-$560 million. Adjusted EBITDA is projected to be $665-$745 million compared with the prior guidance of $655-$745 million. Signet also raised its adjusted EPS outlook to $9.20-$11.00 from the earlier mentioned $8.80-$10.74.
The fiscal 2027 guidance assumes a dynamic tariff, commodity and consumer environment, planned capital expenditure of $150-$180 million, and a low-single-digit reduction in net square footage. Notably, the adjusted EPS guidance excludes any potential share repurchases beyond the planned $50-million accelerated share repurchase program.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
VGM Scores
At this time, Signet has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. It comes with little surprise Signet has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Signet Jewelers Limited (SIG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).