Signet Jewelers Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ike Boruchow - Wells Fargo Securities, LLC - Analyst : Question for me on the gross margin line. So up modestly in the third quarter, you've had merch margins up around 100 bps in the first two quarters of the year. Is there reason to believe that the merch margin trajectory should remain consistent into the back half and just there would be less offsets from deleverage as the comps improve? And then I guess, the second question, maybe for Joan or Gina. Just can you give us some guardrails around holiday specifically. It's just obviously, it makes the breaks the year, given how much volume you guys do. Can you give us some thoughts on what exactly your expectations are whether it's comp or -- I don't know if there's any other variables you could point out to us, that would probably be helpful.

Question: Ike Boruchow - Wells Fargo Securities, LLC - Analyst : Got it. And then just to go back to the gross margin. Juts, where there was a lot of talk on the last conference call about the promo environment, the competitions, what was going on that you guys spoke at length about that. Can you just give us an update three months later? How is that playing out? Is anything worsening? Is it improving? Is it flat lining, just at a high level? That would probably be helpful too.

Question: Ike Boruchow - Wells Fargo Securities, LLC - Analyst : Got it. Thank you.

Question: Paul Lejuez - Citi - Analyst : Can you say what Engagement units are running year-to-date and quarter-to-date? And curious what do you have to see in 4Q to hit the plus 5% for the year? And then within that Engagement units being up quarter-to-date, I guess, it sounds like sales are still down. So maybe can you talk about the average ticket engagement and how that average ticket looks in Naturals specifically versus like Lab. specifically when you compare it to last year?

Question: Paul Lejuez - Citi - Analyst : Got it. And just to follow up with the plus 5% for the year, would that be consistent with the high end of guidance then?

Question: Paul Lejuez - Citi - Analyst : And, sorry, right. And then what do you need to do in the fourth quarter to get to that plus 5%?

Question: Paul Lejuez - Citi - Analyst : Thank you, guys. Good luck.

Question: Lorraine Hutchinson - BofA Global Research - Analyst : Thank you. Good morning. Has the volatility in Lab-Created-Diamond prices changed your customers' perception of that as an option? I'd just be curious to hear the feedback you're hearing from customers and if it's different between Bridal and Fashion?

Question: Lorraine Hutchinson - BofA Global Research - Analyst : Thank you.

Question: Jim Sanderson - Northcoast Research - Analyst : Just wanted to talk a little bit more about marketing spending. I think you mentioned that you might see an acceleration in the current quarter in anticipation of holidays. But can you step back and give us an idea of how you expect this dollar budget to grow over time? Is that -- are you starting to lean into marketing as an investment to drive stronger foot traffic? Is that something that could be a near-term pressure point on operating income, just how we should look at that line item?

Question: Jim Sanderson - Northcoast Research - Analyst : Understood. And then going forward, though, should we think of that line item is something that would grow in tandem with revenue growth? Or do you expect to see some investment to drive broader brand awareness over the next several years? So I think that's really what I'm getting at.

Question: Jim Sanderson - Northcoast Research - Analyst : Understood. Just a quick follow-up on the Lab-Grown-Diamond category. Could you update us on what your lab-grown mix is to date? How that's changed?

Question: Jim Sanderson - Northcoast Research - Analyst : Thank you very much.

Question: Mauricio Serna - UBS - Analyst : Just maybe could you talk a little bit more about -- just thinking about the guidance for the -- implied guidance for fourth quarter. If I want to get to like the low end of the range, I think I'm seeing like a high single-digit decline in total revenues for the third quarter, what would that scenario be? I guess, just you guys are trying to be conservative, but I just want to understand like what are the puts and takes for that particular scenario? And then I have another quick follow-up on margins.

Question: Mauricio Serna - UBS - Analyst : Got it. And then just a quick follow-up on the fourth quarter on the margin side, actually, just doing the numbers again, like it does imply like a year-over-year expansion at operating margin, I think, over 300 basis points. Just trying to understand like where is that coming from? Is that like better gross margin acceleration, SG&A dollars are going to be down like high single-, low double-digits? Just trying to understand what is really contemplated into that really good fourth quarter?

Question: Mauricio Serna - UBS - Analyst : Got it. And how much was the 53rd week from an SG&A dollar standpoint? Just to bear that in mind -- have that in mind?

Question: Mauricio Serna - UBS - Analyst : Thank you so much. Yes.

Question: Dana Telsey - Telsey Advisory Group - Analyst : As you think about the margins on the Digital Banners, can you get -- and I think last quarter, you had some improvement of up to 300 basis points. How is that margin -- what are you seeing in terms of the Digital Banner margin now? And also, it sounds like Services continues to be meaningful. Is that an increasing contribution to margins? And then just a follow-up on the real estate side, what did you see during the quarter in terms of performance of the physical real estate, whether it's location or banner?

Question: Dana Telsey - Telsey Advisory Group - Analyst : Thank you.