Signet Jewelers Stock Falls. What Earnings Say About Holiday Shopping.

The parent company of Zales, Kay, and Jared beat quarterly earnings estimates but projected a tough holiday season. (Mark Kauzlarich/Bloomberg)

Key Points

• Signet Jewelers declines after exceeding third-quarter earnings expectations but forecasting a challenging holiday season.
• The company reported adjusted earnings of 63 cents a share and sales of $1.39 billion, with same-store sales increasing 3%.
• Signet projects fiscal-fourth-quarter sales between $2.24 billion and $2.37 billion, falling short of the $2.38 billion analyst consensus.

Shares of Signet Jewelers fell Tuesday after the parent company of retailers like Kay, Zales, and Jared beat quarterly earnings expectations but projected a difficult holiday season.

Signet posted adjusted earnings of 63 cents a share for its fiscal third quarter, ahead of analysts’ consensus estimates of 29 cents. Sales totaled $1.39 billion, above Wall Street’s call for $1.37 billion. Same-store sales jumped 3% from a year earlier.

But the company expects sales between $2.24 billion and $2.37 billion for the fiscal fourth quarter, which encompasses November, December, and January—hot months for holiday shopping and the buildup to Valentine’s Day. That range fell short of analysts’ consensus projection of $2.38 billion.

CEO J.K. Symancyk said in a statement that the company had a “measured outlook for the fourth quarter given external disruptions since late October and potential continued softness in consumer confidence.”

Signet stock was down 4.7% to $91.25 in midmorning trading Tuesday. Shares had climbed 19% this year as of Monday’s close, buoyed by three—now four—consecutive earnings beats.

“The results reflect a continued stabilization of the business, in our view, which was new CEO J.K. Symancyk’s initial focus,” wrote Dana Telsey, CEO of Telsey Advisory Group, on Tuesday. “His longer-term strategy, Grow Brand Love, which focuses on driving growth in self-purchase and gifting through design-led product, while continuing to expand in bridal, appears to be gaining traction.”

Yet Telsey maintained a Market Perform rating on the stock, noting that the fourth-quarter guidance—coupled with macroeconomic uncertainty and the company’s exposure to steep tariffs on imports from India—were cause for concern.

In an interview with Barron’s, Symancyk said the company had embedded a cautious outlook for the holiday quarter since the start of the year to reflect the various macroeconomic challenges that have been weighing on consumers—from tariffs and inflation to, more recently, the government shutdown.

Lower and middle-income consumers have been affected more acutely by the macro environment, and are in turn spending less on discretionary categories, including jewelry. Symancyk noted that Signet’s brands that are more exposed to lower-end shoppers, such as Banter or Zales, were seeing weaker sales growth than those that cater to higher-end consumers, such as Jared and Blue Nile.

Because of that, Signet is leaning into value this holiday season—not an easy feat for a retailer operating in what is often deemed an inherently discretionary category. To counteract that, the company has stocked up on inventory selling for less than $500 and $1,000, particularly in fashion-forward pieces made with lab-grown diamonds rather than natural diamonds.

“We’re seeing some increased conversion and believe that’s endorsement of the fact that we’ve got the right inventory at the right prices and are positioned to serve the customer well heading in, particularly in those last 10 days [before Christmas],” Symancyk said.

Write to Nate Wolf at nate.wolf@barrons.com