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Good morning, and welcome to the Signet Jewelers Limited first quarter fiscal 2026 Earnings Call. Please note that this event is being recorded. Joining us today on the call are Rob Ballew, Senior Vice President of Investor Relations and Capital Markets, J.K. Symancyk, Chief Executive Officer, and Joan Hilson, Chief Financial and Operations Officer. At this time, I would like to turn the conference over to Rob. Please go ahead. Good morning. Welcome to Signet Jewelers Limited First Quarter Fiscal 2026 Earnings Conference Call.

During today's discussion, we will make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties. Actual results may differ materially. We urge you to read the risk factors, cautionary language, and other disclosures in our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Except as required by law, we undertake no obligation to revise publicly update forward-looking statements in light of new information or future events. During the call, we will discuss certain non-GAAP financial measures. For further discussion of the non-GAAP financial measures as well as reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures, investors should review the news release we posted on our website at ir.signetjewelers.com. With that, I'll turn the call over to J.K.

Thanks, Rob. And good morning, everyone. I'd like to open my remarks today with a thanks to our team. Your dedication is delivering results, including both same-store sales and operating income growth above our guidance range. I recently had the chance to spend extended time with our top sales associates in the organization, and your passion and commitment to executing on our strategy is inspiring. Thank you for all your hard work. There are three key takeaways I'd like to leave you with today. First, our quick actions delivered results ahead of our first quarter expectations with both same-store sales and adjusted operating income growth. Second, our Grow Brand Love strategy is in the early innings of delivering long-term sustainable growth by better aligning our brands to their unique customer expectations as well as balancing assortment architecture in both bridal and fashion. All supported by a realigned organization. And third, we're confident in our ability to manage the levers under our control to execute in a dynamic macro landscape. Turning to the quarter, the actions we took in response to holiday, and our early work on Grow Brand Love led to the outperformance I just mentioned. With balanced growth across all categories. Fashion same-store sales sequentially improved roughly four points to the fourth quarter, led by improvement in the key gifting price point range of $250 to $500. We also drove improvement in bridal by filling assortment gaps, particularly within our largest brands. Finally, we're gaining traction on our centralized marketing efforts with a more than 30% increase in impressions at our three largest brands, on a low single-digit increase in ad spend to last year. We'll cover our performance in more detail as we discuss our early progress on our Grow Brand Love strategy. You'll recall that strategy addresses three imperatives we believe will drive shareholder value. Those three are shifting to a brand mindset, growing our core and expanding into adjacent categories, while aligning our organization to support the first two imperatives. With that, let's jump in. First, talking through our shift to a brand mindset, we have developed a go-to-market strategy unique to each of our largest brands. Kay,

Thanks, J.K., and good morning, everyone. The activation of our Grow Brand Love strategy is intentionally focused on driving sustainable growth with disciplined execution and accountability across the company. We have aligned our organization to our strategy, and are beginning to maximize our scale advantages through centers of excellence that drive enterprise-wide impact. Concentrating on our three largest brands creates the most meaningful impact on growth, most immediately through assortment architecture, promotion management, and maximizing the investments in our e-commerce channel. In parallel, we are fully engaged on longer-term initiatives including delivering on our real estate plan, expanding services offerings, and building brand equity. Particularly in fashion. Turning to the quarter, revenue was $1.5 billion with same-store sales growth of 2.5%. With growth across every major category, including services. Further, Kay

Thank you. And ladies and gentlemen, we will now begin the question and answer session. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star followed by the number two. With that, our first question comes from the line of Paul Lejuez with Citigroup. Please go ahead.

Hey. Thanks, guys. I'm curious if you could quantify your unmitigated tariff pressure and then maybe if you could size the pieces in terms of the actions that you're taking to mitigate those pressures? And then second, curious if you could talk about pricing in both lab and natural I'm curious how each of them are trending within the bridal and fashion categories and how you're thinking about that for the rest of the year? Thanks.

Yeah, Paul. I know, as far as tariffs are concerned, I think the you know, there's really a couple of levers that we're leaning into to take advantage of that. And, you know, it's not so much about cost impact as thinking about what are the things that we need to do to continue to hit the right price points and maintain margin structure within the business. So that becomes as much of an exercise in design and assortment architecture to really make sure that we can still hit those key price points. If you think about the landscape today, I mean, there's an incremental, you know, 10% tariff on India primarily. Obviously, you know, that ball is moving around a little bit, and that's why I think agility is really important for us as we think through it. We do have, you know, a little bit of an advantage in the sense that our business is a longer lead time business. And so that means we've gotta stay out in front of it, but it also means we've got a great inventory position going into it where we have the flexibility to really adjust our assortments as we hit these key holiday time periods. I would also point out, I mean, it's not part of your question, but there's a couple other levers here. I mean, what's happening with commodity prices is one of them. And, of course, part of that is gold. So all of it kinda goes into the mix as we think about sourcing strategy and assortment architecture. As we shared on the call, it's baked into our guides so we feel confident about how we've accounted for it based on what we know today. But those three biggest levers, I would say the largest of them is really how do we think more maybe differently about assortment architecture to deliver. Second would be ultimately country of origin sourcing opportunities and where we feel like the best place to place goods are, how we're working with our suppliers to best leverage that. And then the third is really more about looking at any sort of shifts in placement, particularly as it relates to timing. How do we think about timing of receipts to be able to make sure we're safeguarding the fourth quarter? From a cost standpoint, I think we've seen a pretty consistent set of actions going on, particularly as it relates to lab versus natural. Natural has stabilized of late. That's actually been reported beyond our business. It's out there publicly. There is some continued deflation within lab, but the phenomena I see playing out in our numbers is it's actually continued to be a source of expansion for AUR for us. Partly because of how consumers have traded up in some categories. And then the expansion of lab and fashion really, that lower cost is part of what enables the growth of lab as part of an entrant into a category where it would have been underpenetrated before. So that lab growth in fashion is I would dimensionalize totally different. It really is an accretive opportunity just it's expanding the utilization of diamonds in the fashion space.

The only thing I'd add on to that, Paul, is that lab from a Lab Diamond perspective, it's decreasing but at a slower pace. Than we've seen in the past. And then with respect to quantifying, what we've said is that our guidance includes our view of the impact of tariffs on our business as we know it today. And it includes anything unknown or new. That may come forward. But we believe that at the low end of our guidance, we've provided for some flexibility related to that. And we're very pleased with the work that the team has done around, promotional promotion management, and, you know, J.K. cited in his prepared remarks that Jared on its own have reduced discounting by 20%, and we've seen you know, as the 10-Q is filed, you'll see that the in Jared. And, you know, as we noted, those three the three big brands were up. Positive comps, very important to our business overall. So pleased with the execution of our promotional planning and refinement of that strategy to help us, you know, work through some of these other factors that we can navigate through sourcing SJK-seven through you know, assortment architecture. Got it. Thank you, guys. Good luck. Yeah. Thank you. Appreciate it. Appreciate it. And your next question comes from the line of Ike Boruchow with Wells Fargo. Please go ahead.

Hi. Good morning. This is Juliana Duque for Ike. For J.K., maybe a couple of questions. If you could compare the performance of fashion and the ongoing recovery of Vital and maybe just give more on both there, specifically on any progress on Sage's market share position within each of these two. And additionally on that, he mentioned last quarter that lab presented a new customer opportunity. Have you guys seen a ramp up in that new customer in Q1? And then I think that's it. Thank you.

Okay. Yeah. Thanks, Juliana. I think I got it, but if I missed something, please let me know. So on fashion versus bridal, obviously, we talked a lot about bridal trend. I think I've been pretty clear that while I don't necessarily know that there's a level of precision that maybe we've articulated in the past, the directional movement of it. Up and to the right has continued, and we see that playing out in this quarter. On the fashion side, I mean, this is where I'll kind of come back to what I pointed to in the first part of it. Long lead time business also means it takes a little bit of time to adjust assortment, but we've taken very clear actions around where we felt like there were holes in assortment. Or maybe where we lack the depth at key price points. And been, I think, a little more deliberate around where there's opportunities for newness that led to same-store sales sequential improvement of four points and move fashion to positive, which I think is an important first step for us. But I think there's more to go. It does take time to reset an assortment. It also takes time to really build that credibility with customers. And I think, doing that on a consistent basis is we certainly were doing the work to put ourselves in that position. Believe that's what we'll deliver, but I'm pleased with the progress in the first quarter. And I would say, the star of that show really has been our work around that sub $500 price point to make sure we were shoring up the misses in assortment that we had. I think that's critical for us both for every day. As well as for some of those key gifting periods. And, you know, there are real highlights in a brand like

Great. Thank you.

Yeah. And thanks for the question.

And your next question comes from the line of Dana Telsey with Telsey Group. Please go ahead.

Hi. Nice to see the progress. As you think about the health of the consumer, what are you seeing in the different brands? Is it differing? And are you seeing in terms of price point ranges? Given the AUR went up to 8%, I believe, from 7% last quarter. That trend, where do you see it coming from and progressing? And then just lastly, as you think about the upcoming holiday season, marketing, new product launches, how are you thinking about that in the midst of this environment of tariffs and potentially more pressured consumer. Thank you.

Dana, can you repeat the first part of that question for us, if you don't mind? I think you're asking about health of consumer, but I don't want to guess at it. You cut out for just a second.

No problem. It was about AUR growth increased from to 8% from 7%. Where is that AUR increases coming from? How do you see that developing going forward?

Yeah. I mean, the AUR growth really has been across the business. And I think the fact of the matter is there's two different dynamics there. In bridal, I think it's consistent with what we've talked about. The stability of cost and price and really to the degree there is a decision that customers are making relative to natural versus LGD. They continue to trade up in size and LGD and that hasn't really changed. I think we've pointed to a little more predictability and stability to that, but that trend is pretty clean. On the fashion side, even though we are talking a lot about $250 to $500 price point being a key driver of that business, it may sound repetitive, but LGD is an expansion of the use case of diamonds into fashion and really does create a trade-up opportunity and spend that you know and I hesitate to say trade up because that choice is a little more discretionary and but it really is opening up a new avenue of merchandise, and that's helping drive AUR for us. It's part of where we feel like there's an opportunity for growth. As far as the consumer, I think we said it. There's resiliency there. And what we're seeing in AUR increase is more about making sure that we are aligning to the right trends and sort of matching design and the need and wants of consumers. I think we do that. Consumers are showing the resiliency to spend on those things that they really want. And if we fall short of that, then that's when I think some of the pressures around AUR or promo start to creep in. And so we continue to put that focus on the right assortment at the right time, at the right value proposition for customers. And I think we'll continue to see these kinds of trends. I know, the one thing I would call out though as it relates to AUR. I think we expect it to be up, but the growth of fashion at a lower price point in aggregate will moderate AUR in total for us. And so I think part of our job is to really dimensionalize that within our business just so that we're not giving a false read, so to speak, on what the health of that looks like, within our business overall. As far as your second question, I think marketing, overall, I mean, for us, and we talked about it, our cost up slightly, but with a 30% increase in impressions, that's important for us because it really does help market to a new set of customers, and our world. I think it's a that's gonna be critical for us as we move forward just it'll expand our universe and we do think that obviously, guide sort of allows for a little bit more dynamic consumer environment and we're prepared for it, I think it'll be for us to make sure that we are really targeted and in both our spend and our audience. You know, the interesting thing is we continue to see an opportunity to pull back on promotion, and I think that's gonna be really critical to kinda cut through some of the noise for the holiday and make sure that we're much more focused on what the key drivers are, how do we hit key price points, and then ultimately, how do we leverage those windows of demand and strike the right balance between a more traditional top of funnel spend, but the continued expanded reach in digital that we're seeing drive the business right now.

Thank you.

Yeah. Thanks for the question.

And your next question comes from the line of Mauricio Serna with UBS. Please go ahead.

Great. Good morning, and thanks for taking my question. I wanted to ask just on maybe on the lab-grown diamond business. Could you remind us how much of your business is Lab-grown Diamond now? And like, for the guide, like, what's implied it to be by, you know, by the end of the year in terms of penetration? And then just some commentary, just confirming some commentary earlier ahead, like, quarter-to-date, comp sales are up low single digits. And could you just, like, explain a little bit more that two-year stack comments you talked about? Is that on comps or total sales? Just to make sure we got that right. And then lastly, on gross margin. You know, you talked about expansion for the full year. Does that include some any impact from leverage or deleverage? And just on that, like, what's the leverage point of the business at this level? Thank you.

Thanks, Mauricio. From an LGD penetration perspective, overall penetration is roughly 20%. This is up about five points to last year. And, you know, in line with our, you know, our positioning of our assortment. So and as we continue to drive this was reflective of our drive of LGD in fashion, particularly as you know, it carries a two times higher AUR than other fashion pieces. So we think this is very important. To the point on driving gross margin expansion for us as well. So that is the positioning on LGD. With respect to, our comp, and you when we think of, Q2 and fiscal 2026 guide, I'll address that. Quarter-to-date, our performance is currently near or just above the high end of our, you know, comp range for the quarter. Both our quarterly and full-year guide provides for flexibility for the measured consumer environment and variability in consumer spending. On a two-year stack basis, the high guide and the midpoint is a roughly two-point improvement on the second quarter. The lower half of our guide continues to provide flexibility in the back half of the year for the measured consumer environment and reflects at the low end a two-year stack consistent with the second quarter. So it's a measured view, and believe that we're positioning our guidance in the right place. And just as you think about the second quarter and where we've positioned the guide, July is a tougher comp for us year over year. So we had a better performance last year than we saw in the first two months of the second quarter. So we continue to really evaluate our assortment architecture and really enjoying the momentum that we're seeing in assortments that the team has put forward. And the breadth of price points that we're able to offer the consumer particularly in the backdrop of the environment today. Then with respect to gross margin, our gross margin performance with the 50 basis points expansion, the GMM expansion, in first quarter was 50 basis points, and we did see leverage on the positive 2.5% comp in occupancy and some other inventory-related items in the quarter. And I'm very pleased with that. On a go-forward basis, we believe that we can leverage GM or gross margin on a slightly positive comp. And continue to believe we'll see expansion throughout the balance of the year at a similar level. And that's what's reflected in our guidance.

Understood. Thank you so much, and congratulations.

Thanks, Mauricio.

And your next question comes from the line of Jim Sanderson with North Coast Research. Please go ahead.

Hey. Thanks for the question, and congratulations on a great quarter. I wanted to lean in a little bit more to the lab-grown feedback you provided. What is your outlook on your ability to achieve the higher end of guidance if there are increased tariffs coming out of India? Trying to understand your exposure to that product line and the risk of higher tariffs.

Yeah. I appreciate the question. I think the biggest probably takeaway as we think about tariffs, I mean, is first, it's a fluid issue. And as it stands today, we've got a task force that is literally meeting across the business. Weekly, sometimes daily based off of what new cycle may be to make sure that we're coordinating our actions. I do think this is maybe something I should have touched on in sort of the first round of question on tariffs. As the largest player in the space and with the portfolio of brands that we have, our ability to leverage our scale thoughtfully as partners is a real advantage. I think that's something that we're also trying to make sure that we are coordinating those efforts across our portfolio so that we're thinking about not only the health of our business, but the health of the consumer. Ultimately, health of our partners. I think this is a lot of stakeholders here that are thoughtful around how that's gonna play out. As far as this issue specifically with lab, I think it's less of a pressure point. The control that we have around those input costs. And when I say those input costs, even beyond tariff, size of stone, what's the design, that we're building, how do we flex fabrication as well as timing. I mean, all of those are levers that I think are actually a little more controllable in the space of lab and unlike maybe some of the other commodity input costs where we can lean into production almost like a manufacturer and have a little bit more flexibility to make sure that we're engineering the right product at the right price point to really meet and drive demand within the business. And so I don't see that as, at least based off set of facts we know today, I don't see that as one of the more critical levers relative to any sort of risk to our guide.

Alright. Thank you for that. Just a quick follow-up on the bridal category. Were your unit growths in the quarter comparable to industry? Or did you actually exceed industry trends? With respect to engagement rings?

We believe that, you know, we have looked at indicators, external sources, Jim, and we believe that we're gaining traction, in that space. And if you look at in your own checks, the Google search, related to engagements and so forth is up too. So we're pleased with, you know, what we're seeing happen in the bridal category of our business.

Alright. And just one last follow-up you could. Did you indicate what share of your bridal sales were lab-grown? In the quarter?

Basically, in the mid-30 range. For us. Mid-30.

And how is that compared to last year?

It would be up to last year, Jim, as you might that in our core banner sales and Kay, particularly, we had a lower penetration at some of the lower price points in lab for those brands. And so we've been able to improve the assortment architecture relative to that. And while doing that, we were still able to see a bridal AUR increase, slight increase, reflecting the balance of the assortment between natural as well as lab.

Thank you very much.

Yeah. Thank you.

And we have no further questions at this time. I would like to turn it back to J.K. Symancyk for closing remarks.

Okay. Well, in closing today, I'd really like to thank our team again as well as our other key stakeholders, including our vendors, banking partners, and the investment community. I'm so proud of our team for striking the right balance between good foundational strategy work and remaining focused on executing. To deliver results in a dynamic environment so that we can deliver on both short and long-term goals. And I've been encouraged in the extensive time I've spent in recent months alongside our strategic vendors who are committed to the Grow Brand Love strategy. I'm excited about the commitment of all of our stakeholders as we continue to build momentum on our Grow Brand Love strategy. And I thank everyone here for their time today. We really look forward to putting together and providing additional updates and further progress throughout the year. Thank you.