Signet chief operating and financial officer Joan Hilson (pictured) spoke to me on Tuesday following release of the company’s financial results for the second quarter of fiscal 2026 (ended Aug. 2).
Usually in our calls, Hilson tries to find silver linings to some so-so numbers. Not this time. That’s because Signet’s latest results were rather good. They not only beat analyst expectations but showed annual increases in both comps (up 2%) and sales (up 3%, to of $1.5 billion).
The jewelry giant also reported $2.8 million in operating income for the quarter, compared with a $100 million loss the year before.
Yet Hilson acknowledges Signet still has a lot of work to do and faces numerous challenges. Here, she discusses how the company is coping with tariffs, what’s happening with lab-grown diamonds, and its plans for competing e-tailers Blue Nile and James Allen.
As you know, tariffs on Indian goods have risen to 50%. How is that going to affect Signet?
Our team has done a great job managing the tariff situation. India represents roughly 50% of our finished jewelry purchases. We’ve worked with our vendors to negotiate specific SKU pricing for critical items for the holidays, and we have tried to get as much product in early before the tariffs are incurred. We are also working with our vendors to explore opportunities to shift production to other countries from India.
We’ve value-engineered some merchandise to avoid retail price increases where possible. And then we’ve leveraged on-hand inventory to avoid tariffs.
We’ve also taken some small price increases where appropriate on specific SKUs. We believe that the average is a mid-single-digit range of increase. We’ve had a comprehensive approach to managing tariffs, and it’s enabled us to essentially stay within our guidance range.
President Trump’s tariffs were just deemed illegal by a federal court, though the court is keeping them in place through Oct. 14, so the administration can bring the issue to the Supreme Court. If the tariffs are struck down, it’s possible any tariff payments will be refunded. How will the company handle that?
We would expect some benefit within our merchandise margin, but the timing and the amount is still very uncertain. Given the range of outcomes, I can’t even speculate at this time.
Have you found any impact from the tariffs on consumer behavior?
I would say: Not at this time. We obviously had a very good comp performance in the second quarter. We comped our toughest months last year in July, and we’ve seen the momentum continue into August.
We believe the consumer is willing to spend for the right assortment and the right value. And the architecture that we’ve put forward in our holiday assortment really focuses on key gift-giving price points below $500, and [items] in the $500 to $1,000 range.
We have increased the penetration of lab-grown diamond fashion. In the second quarter, we doubled the penetration [of lab-grown diamonds used in fashion] from 7% to 14%. And we see continued room for growth in lab-grown, which is an expander for us, particularly as we focus on fashion.
And how about lab-grown for engagement rings?
Year-over-year, lab-grown engagement penetration has increased. The retail prices have stabilized for us, and we’ve seen a slight increase in natural diamond prices over the last six months across carat sizes. We’ve been able to maintain a consistent average unit retail price within bridal in our business. We see bridal as consistent performer for us.
We’ve talked about Signet’s “Grow Brand Love” strategy. Do you want to talk about what you think is working? Is there anything you’re reconsidered?
Number one, the reorg and reestablishment of the leadership team has been a positive.
Merchandising is now within each brand. We like what we’re seeing. Key price points and each brand’s identity is coming to life. In marketing, we’ve moved to a more full funnel approach, but we’re in the early stages in terms of [new chief marketing officer Lisa Laich] having an impact. We’re focused on where we spend, and we’ve seen a 20% increase in advertising on social media channels over last year.
Store experience will take a little more time to take hold. However, at Kay and Zales we are testing more interactive presentations, which are self-guided and let the customer touch and feel the product.
Candidly, the intangible [in “Grow Brand Love”] is the accountability. Our brand presidents own the brand’s financial and business performance and identity from top to bottom.
Signet still has other brands in its portfolio—Blue Nile, James Allen, Diamonds Direct—beyond the big three (Kay, Zales, and Jared). What will happen with them?
They’re important, but the focus on the “big three” has yielded positive comp performance for us.
Blue Nile’s comps have turned positive, after some cooling off with promotions. We are pleased with the price-point work and still need to do some work on brand differentiation to upscale that brand and differentiate it from James Allen.
With James Allen, we will bring to market a faster ship component on custom as well as more finished jewelry and fashion basics. We’re differentiating the Blue Nile and James Allen brands to improve their performance.
Diamonds Direct is another brand that was an acquisition for us, and we are looking at how to differentiate that brand from Jared. It’s largely an in-store experience. We have work to do there to bring that to a positive comp performance.
[Canadian chain] Peoples had a nice performance, and the U.K. division continues to perform for us. We don’t talk about them that much, but they are part of our family.
Do you anticipate any consolidation of the other brands?
We are evaluating the positioning of each brand within our portfolio and its purpose. Should James Allen be a brand within the Blue Nile offering, or should James Allen be its own commercial site? That’s what we’re evaluating. There’s also work to be done with some of the other brands.
(Photo courtesy of Signet)
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