Signet Jewelers (SIG): Fashion remains a strong point for the jewelery retailer

Shares of Signet Jewelers Limited (NYSE: SIG) were down over 3% on Tuesday. The stock has dropped 12% over the past three months. The company faced challenges in the third quarter of 2025, causing it to deliver disappointing results and lower its guidance for the full year. Despite these headwinds, it saw momentum in the fashion category, which helped offset weakness in the engagements business in Q3.

Strength in Fashion

In the third quarter, Signet recorded positive sales in Fashion, helped by strong sell-through of new merchandise. In North America, the average transaction value (ATV) for Fashion was up mid-single-digits, driven by an increase of more than 30% in lab-created diamond fashion sales. Lab-created diamonds provide opportunities for expansion in the fashion category.

Signet expects to deliver a positive performance for the holiday season helped by its go-to-market strategy. It has positioned its merchandise and marketing to enable it to benefit from the momentum it has been seeing in Fashion over the past few quarters.

As mentioned on its conference call, the company has increased inventory penetration of newness to over 30% in core banners, up more than 10 points to drive holiday selling. The increase in new fashion merchandise is expected to help provide the customers greater value at an attractive margin and ATV. Signet expects Fashion sales to be up modestly in the fourth quarter of 2025.

Decline in engagements

The strength in the Fashion segment helped offset the decline in engagement performance in digital banners. In Q3, within the Bridal segment, total North America engagement units were down 2% due to the performance in digital banners. Excluding the digital banners, units were up nearly four points in the quarter. North America Bridal ATV was down mid-single-digits in Q3 due to competitive price pressure in loose stones.

Similar to Fashion, Signet has been taking measures to help drive positive performance in the Bridal segment during the holidays. Since December tends to see a higher number of engagements compared to other months, the company expects engagement units in December to be positive. Signet expects engagement units to be up low to mid-single-digits in Q4 2025.

Services – another growth area

Services is another area of growth for Signet. In Q3, services revenue grew nearly 2%, outpacing merchandise sales. Extended service agreements (ESAs) attachment rates grew 170 basis points to last year, helped by momentum in post-repair ESA and fashion merchandise. In addition, services carries a 20-point margin premium to merchandise.

Q3 performance

In Q3 2025, Signet’s net sales decreased 3.1% year-over-year to $1.3 billion. Same-store sales were down 0.7%. Adjusted EPS remained flat YoY at $0.24.

Outlook

For the fourth quarter of 2025, Signet expects total sales to be $2.38-2.46 billion and same-store sales to be flat to up 3%.

The company lowered its guidance for the full year of 2025. It now expects total sales to range between $6.74-6.81 billion versus the previous range of $6.66-7.02 billion. Same-store sales are now expected to be down 3% to 2% versus the previous expectation of down 4.5% to up 0.5%. Adjusted EPS is now expected to be $9.62-10.08 versus the prior outlook of $9.90-11.52.