Dive Brief:

• Mall-based jewelry specialist Signet more than doubled its sales from last year in the second quarter and surpassed 2019 levels as well. Net sales came to $1.8 billion as same-store sales in North America rose 97.4% from the same quarter last year, part of which included COVID-19 closures.
• The retailer — which owns the Jared, Kay, Zales and other banners — posted a $225.4 million operating profit, up from an $89.7 million loss from last year, and a loss ($22.4 million) from 2019 as well.
• CEO Virginia Drosos said in a press release that the company was raising its outlook for the year to reflect "our business strength and confidence in our growth strategy while remaining cautious regarding the impacts of the macro environment, particularly in the fourth quarter."

Dive Insight:

Signet's Q2 represents a major recovery from the travails of last year, but the retailer acknowledges that the roaring growth isn't destined to last forever. In its earnings report, the company said that it expects a shift in consumer spending away from the jewelry category and toward experiences as the U.S. tries to move on from the pandemic.

The company forecasts that the shift will happen this year, with estimates for Q4 same-store sales to turn negative. Signet also plans to spend more on marketing in the second half of the year to try to manage a changed consumer environment. 

However, Signet also noted that the delta variant of COVID-19 "has added complexity in predicting the magnitude and timing of this shift." Drosos told analysts that delta had delayed the expected consumer spending shift, which is partly why the company raised its Q3 estimates as well as its outlook for the year. The company now anticipates a same-store sales increase of up to 33%, up from a ceiling of 27% that the company previously estimated.

Along with broad trends, Drosos also credited the company's strategic efforts for its Q2 performance. "While category tailwinds existed in Q2, it was our differentiated assortments that resonated with customers, our connected commerce capabilities that increased conversion and our always on targeted marketing that all worked in combination to deliver strong growth this quarter," the chief said on the conference call with analysts, according to a Seeking Alpha transcript.  

Telsey Advisory Group analysts led by Dana Telsey credited Signet's earlier investments in digital and merchandising strategies with the retailer's ability to capitalize on an upswing in demand. The analysts said that as customers, especially younger consumers and those with young children, become wary of the delta variant, Signet has "remained flexible, meeting its customer wherever they prefer to engage, delivering a seamless, enjoyable shopping experience."

As Signet keeps tweaking its store footprint, the company plans to close over 100 stores this year while opening another 100, mainly in its Piercing Pagoda format, which Signet describes as "highly efficient" and Drosos said targets the "value end of the mid-market."