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Signet Jewelers (NYSE: SIG) has long had many of the elements of an attractive value stock.
The company is the world's largest retailer of diamond jewelry and has a stable of well-known brands, including Kay, Zales, Jared, and Blue Nile. It also has a history of delivering profits and returning cash to shareholders through dividends and share repurchases.
Over the last four months, however, Signet shares have fallen sharply. This followed a disappointing fiscal 2025 third-quarter earnings report, a weak holiday sales update in January, and declining consumer sentiment, which investors see as a headwind for the discretionary retailer.
Even after the stock popped on Mar. 19 thanks to better-than-expected results for its fiscal fourth quarter (ended Feb. 1), it's still down 50% from its 52-week high.
Is the recent pullback a buying opportunity or a warning sign? Let's get into the details.
A quick turnaround
In mid-January, the company reduced its Q4 guidance after reporting a 2% decline in same-store sales for its holiday season (the ten-week period ended Jan. 11). Its revenue forecast decreased from $2.42 billion at the midpoint to $2.33 billion. The same-store sales outlook of 0% to 3% growth was also revised to a 2.0% to 2.5% decline.
The resulting sell-off in the stock was understandable as the fourth quarter is Signet's most important and generates the majority of its profit. However, Signet's actual Q4 results showed same-store sales declining 1.1%, while revenue declined 5.8% year over year to $2.35 billion. Both figures beat management's revised guidance from two months ago.
Better yet, Signet said same-store sales were positive both in January and year to date. Its latest guidance calls for same-store sales growth of 0% to 2% in the first quarter of fiscal 2026, and full-year adjusted earnings per share of $7.31 to $9.10, which compares to $8.94 in fiscal 2025. The January performance was also boosted by a strong month for engagements; the company had been anticipating a recovery in engagements after a slowdown during the pandemic.
A new strategic plan
With the earnings report, the company announced a new strategic plan it's calling "Grow Brand Love". This includes a shift in its focus from banners to brands and prioritizing brand loyalty rather than promotional sales. It's also streamlining its leadership around four retail categories, moving to a flatter organizational structure; aiming to grow market share in core areas like bridal and gold; and making a push in opportunities like self-purchasing and giving.