Signet Jewelers, identified by its ticker symbol SIG, has historically possessed the traits of an appealing value stock. As the world’s largest diamond jewelry retailer, Signet manages several prominent brands, such as Kay, Zales, Jared, and Blue Nile. The company is known for consistently generating profits and distributing cash to shareholders through dividends and share buybacks.
However, in recent months, Signet’s shares have experienced a sharp decline. This downturn followed a less-than-stellar fiscal 2025 third-quarter earnings report, an underwhelming holiday sales update in January, and a drop in consumer confidence, which investors view as a challenge for the discretionary retail sector.
Despite a positive surge in stock value on March 19, following better-than-anticipated results for its fiscal fourth quarter (ending February 1), the shares remain 50% below their 52-week high.
The company encountered reduced expectations in mid-January when it lowered its fourth-quarter guidance due to a 2% decrease in same-store sales during the holiday season ending January 11. The revenue forecast was adjusted from a midpoint of $2.42 billion to $2.33 billion, and the same-store sales outlook shifted from 0% to 3% growth to a 2.0% to 2.5% decline.
Given the significance of the fourth quarter in generating profits, the resulting stock sell-off was predictable. Nonetheless, Signet’s actual fourth-quarter outcomes showed a 1.1% decline in same-store sales and a 5.8% year-over-year decrease in revenue to $2.35 billion, both surpassing the revised guidance. Furthermore, the company reported positive same-store sales both in January and year-to-date. Signet’s latest forecast projects same-store sales growth of 0% to 2% for the first quarter of fiscal 2026 and a full-year adjusted earnings per share of $7.31 to $9.10, compared to $8.94 in fiscal 2025. The uptick in January was also bolstered by a strong period for engagements, anticipating a recovery after the pandemic-induced slowdown.
In conjunction with its earnings report, Signet introduced a new strategic initiative, “Grow Brand Love,” focusing on brand loyalty instead of promotional sales. The strategy involves a structural reorganization based on four retail categories, aiming to expand market share in key areas, and exploring opportunities in self-purchasing and gifting sectors.
CFO Joan Hilson highlighted the potential for market share growth in self-purchasing, indicating that a one-point share increase in this sector could be worth five times more than in bridal. This strategic overhaul coincides with the recent appointment of CEO J.K. Symancyk, who succeeded Gina Drosos. Given the recent decline in comparable sales, this strategic revamp appears timely.
Additionally, major shareholder Select Equity Group communicated dissatisfaction with Signet’s performance and leadership to the board in late February, urging consideration of strategic options, including a potential sale of the business.
Despite the recent 17% rise in stock price on March 19, Signet still presents as a deep value investment, with a price-to-earnings ratio of 6.4 based on trailing adjusted earnings, and a valuation of 5.6 times trailing free cash flow. Management has also announced a 10% increase in the quarterly dividend to $0.32, resulting in a dividend yield of 2.3%.
While the return to growth in same-store sales offers optimism, full-year guidance still anticipates a 0.5% decline at the midpoint. Signet’s valuation suggests potential favorable risk-reward prospects, although investors should brace for continued volatility until the effectiveness of the new strategic approach becomes evident.
