Signet Jewelers Limited (NYSE:SIG) stock surged Wednesday after the jewelry retailer reported second-quarter fiscal 2027 results that beat Wall Street earnings expectations despite sales coming in roughly in line with estimates. The company also raised its full-year adjusted EPS outlook.
The rally was likely amplified by a short squeeze, with over 18% of the public float sold short.
Signet reported adjusted EPS of $2.19, beating the $1.74 estimate.
Sales fell 0.5% year over year to $1.528 billion, compared with the $1.530 billion estimate. Same-store sales rose 2.2%.
Margins Expand As Profit Jumps
GAAP diluted EPS was $1.33, compared with a loss of 22 cents a year earlier. Results included an 86-cent negative impact, primarily from asset impairments, net of taxes.
Gross margin expanded 80 basis points to 39.4%. The improvement reflected $15 million of tariff refunds and lower inventory and distribution costs, partly offset by higher gold costs.
Operating income jumped to $87.5 million from $2.8 million. Adjusted operating income rose to $107.2 million from $85.4 million, while adjusted operating margin expanded to 7% from 5.6%. Adjusted EBITDA increased to $152.3 million from $128.7 million.
North America sales reached $1.428 billion, with same-store sales up 1.9%. International same-store sales rose 6%.
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Signet Boosts EPS Outlook
Signet raised its fiscal 2027 adjusted EPS guidance to $10.45-$12.15 from $9.20-$11.00, compared with the $10.82 estimate. It maintained sales guidance of $6.7 billion-$6.9 billion versus the $6.841 billion estimate.
For the third quarter, Signet expects sales of $1.37 billion-$1.41 billion versus the $1.393 billion estimate. It expects same-store sales to range from a 1% decline to 2% growth.
Operating cash flow totaled $71.2 million, while free cash flow was $30.8 million. Signet ended the quarter with $526.8 million in cash and equivalents.
The company repurchased 1 million shares for $87 million during the quarter and plans a $125 million accelerated share repurchase this month. Its board increased the remaining share repurchase authorization to $700 million.
Earnings Call Highlights
Management said the Bread Financial agreement should generate more than $1 billion of incremental revenue and operating income through 2035, including $200 million-$250 million over the next 36 months, with no loss sharing.
CFO Joan Hilson said about two-thirds of the guidance increase came from the credit deal, tariff refunds and additional buybacks, while one-third came from core performance.
Tariff refunds still cover less than half of the incremental tariff headwind.
Management said Signet is currently well within its third-quarter guidance range, while fourth-quarter comparable sales implied by guidance range from about a 2% decline to 3% growth.
CEO J.K. Symancyk said value will remain a key focus for consumers across income levels heading into the holiday season. Signet plans to lean on its broad portfolio and offer compelling products across price points as shoppers remain selective. The company is also adjusting its assortment and giving vendors more flexibility to react quickly to changing trends.
SIG Price Action: Signet Jewelers shares were up 19.62% at $98.89 at the time of publication Wednesday, according to Benzinga Pro data.
Photo by JHVEPhoto via Shutterstock
