Executive Summary

Q2 FY2021 revenue was $888.0M, down 34.9% year over year, with GAAP diluted EPS of $(1.73) and Non-GAAP diluted EPS of $(1.13). Same-store sales (SSS) fell 31.3% on store closures, but turned positive late in Q2; preliminary August SSS rose 10.9% and eCommerce grew 65.2% .
Digital-first pivot drove eCommerce growth of 72.1% YoY and new virtual selling at scale (300k+ consultations), with higher conversion and ATV; distribution throughput expanded 5x to prepare for holiday .
Gross margin rate compressed to 25.3% on deleverage and lower Extended Service Plan revenue recognition; SG&A fell materially due to lower labor and advertising; inventory decreased and liquidity strengthened to $1.20B cash .
Guidance remains suspended due to COVID-19 uncertainty; capex expected ~$85M (vs $143M in FY2020); common dividend suspended; store optimization ongoing (293 closures YTD) .
Near-term catalysts: improving comps into August, scaled virtual selling and 5x eComm fulfillment capacity for holiday, and structurally lower cost base; watch margin trajectory given clearance mix and ESP normalization timing .

What Went Well and What Went Wrong

What Went Well

Strong digital execution: eCommerce up 72.1% YoY; virtual consultations exceeded 300,000 with higher conversion and ATV; eCommerce penetration reached 30% during Q2 and ~20% in August as stores reopened .
Sequential comp improvement: SSS progressed from -68.5% in May to -1.3% in July; preliminary August SSS +10.9% and eCommerce +65.2% YoY; brick-and-mortar performance improved as 90% of stores reopened by mid-July .
Cost discipline and liquidity: Net structural cost savings on track to exceed $100M in FY21; inventory down $79M YoY; operating cash flow $156.1M; cash and equivalents of $1.20B .

Quote: “We scaled our new virtual selling model… enhanced our targeted digital marketing to a strong consumer response.” – CEO Gina Drosos .
Quote: “We are prepared to serve our customers… wherever and however they choose to shop this holiday season.” – CEO Gina Drosos .

What Went Wrong

Gross margin compression: GAAP gross margin 25.3% (down ~830 bps YoY) on fixed-cost deleverage and lower ESP revenue recognition; merchandise margin impacted by elevated clearance .
Earnings declined: GAAP operating loss $(89.7)M; Non-GAAP operating loss $(41.7)M; GAAP diluted EPS $(1.73); Non-GAAP $(1.13), reflecting restructuring and impairments .
International softness and store closures: International SSS -38.8%, brick-and-mortar SSS -54.6%; store count fell by 257 in Q2 and 293 YTD as footprint optimization accelerated .

Financial Results

Headline Results versus prior periods

Metric	Q4 2020 (oldest)	Q1 2021	Q2 2021 (latest)
Revenue ($USD Millions)	$2,153.3	$852.1	$888.0
GAAP Diluted EPS ($)	$3.14	$(3.83)	$(1.73)
Non-GAAP Diluted EPS ($)	$3.67	$(1.59)	$(1.13)
GAAP Operating Margin %	10.4%	(34.2)%	(10.1)%
GAAP Gross Margin ($USD Millions)	$897.9	$204.2	$224.3
GAAP Gross Margin %	41.7%	24.0%	25.3%
Non-GAAP Operating Margin %	12.6%	(16.7)%	(4.7)%
Same-Store Sales (SSS) %	2.3%	(38.9)%	(31.3)%
eCommerce Growth YoY %	15.1%	6.7%	72.1%

Note on estimates: S&P Global Wall Street consensus for Q2 2021 was unavailable due to data access limits; as a result, vs-estimate comparisons could not be provided (S&P Global consensus unavailable).

Segment Breakdown (Q2 2021)

Segment	SSS % Change YoY	eCommerce Growth YoY %	Brick-and-Mortar SSS % Change YoY	Sales ($USD Millions)	GAAP Operating Income (Loss) ($M)	Non-GAAP Operating Income (Loss) ($M)
North America	(30.6)%	72.7%	(45.3)%	$823.0	$(57.0)	$(12.0)
International	(38.8)%	65.6%	(54.6)%	$61.0	$(15.6)	$(11.8)
Other	nm	nm	nm	$4.0	$(0.2)	$(0.2)
Corporate & Unallocated	—	—	—	—	$(16.9)	$(17.7)
Total	(31.3)%	72.1%	(46.0)%	$888.0	$(89.7)	$(41.7)

KPIs and Operating Metrics

KPI	Q4 2020 (oldest)	Q1 2021	Q2 2021 (latest)
Payment Plan Participation (NA)	47.0%	43.4%	40.2%
ATV change (NA)	(0.5)%	(6.5)%	+2.0%
Transactions change (NA)	+3.4%	(34.5)%	(28.1)%
eCommerce Penetration of Sales	13.9%	—	30% (Q2); ~20% Aug
Monthly SSS progression	—	—	May: (68.5)%; Jun: (21.8)%; Jul: (1.3)%; Aug prelim: +10.9%
Virtual Consultations	—	—	300,000+
Store Reopening Scale	—	—	~20% open by end-May; 75% end-Jun; 90% mid-Jul
Store Count	3,208	3,172	2,915
Operating Cash Flow ($M)	—	$(7.6)	$156.1
Cash & Equivalents ($M)	$374.5	$1,066.6	$1,204.0
Inventory ($M)	$2,331.7	$2,392.2	$2,193.1

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue/EPS	H2 FY2021	Not provided	Not providing guidance due to COVID uncertainty	Maintained suspension
Capital Expenditures ($M)	FY2021	—	~$85M expected vs $143M in FY2020	Lower vs prior year
Dividend (Common)	FY2021	Temporarily suspended (Q4 FY2020)	Suspension maintained; preference dividend paid in kind (Nov)	Maintained suspension
Store Footprint	FY2021	Close at least 380 stores (150 NA + 80 UK not reopening; plus ≥150 additional)	293 closures executed YTD; >90% of fleet open with safety protocols	Execution progress
Liquidity/ABL	Post-Q2	—	Paid down $100M of ABL after quarter-end	Deleveraging update

Earnings Call Themes & Trends

Topic	Q4 2020 (older narrative)	Q1 2021 (prior quarter)	Q2 2021 (current)	Trend
Digital/Omnichannel	Prioritized digital investments and flexible fulfillment; best holiday in four years	Accelerated digital-first pivot; eComm-only operations while stores closed; virtual selling established	eCommerce +72%; virtual consultations 300k+; elevated eComm penetration (30% Q2; ~20% Aug); 5x distribution throughput	Rapid acceleration and scaling
Virtual Selling	—	Established dedicated team	Scaled to >15,000 associates trained; higher conversion and ATV	Material scale and impact
Footprint Optimization	Lower occupancy costs and off-mall shift	Announced ≥380 closures FY21	293 closures executed; shifting to off-mall and multi-banner tests (James Allen in Jared)	Execution progressing
Supply Chain/ESP Revenue	—	Inventory repurposing; James Allen DC shutdown impacted eComm	Design/service centers closed; ESP revenue recognition lower, impacting SSS ~450 bps	ESP normalization later
Marketing	More balanced, digital mix; efficiencies	—	Prospecting, influencer/social, PR; always-on digital strategy	Digital precision increases
Macro/Guidance	COVID-19 uncertainty; drew $900M ABL	Guidance suspended	Guidance suspended; acknowledged COVID, unemployment, supply chain risks	Uncertainty maintained
Financing Options Online	—	Enhanced leasing/one-time options; PLCC program	Extending financing and extended service plans online ahead of holiday	Added flexibility

Management Commentary

Strategic positioning: “We are seeing our strategic efforts yield results… same-store sales turned positive in mid-July… momentum continued into Q3” – CEO Gina Drosos .
Digital-first execution: “We expanded distribution throughput dedicated to online orders to 5 times that of holiday last year” – CEO Gina Drosos .
Cost and liquidity: “Net structural cost savings are on track to exceed $100 million in FY21… operating cash flow of $156.1 million” – Company release .
Safety and customer readiness: “Love Takes Care safety program… we are prepared to serve our customers this holiday wherever and however they choose to shop” – CEO Gina Drosos .

Q&A Highlights

eCommerce customer mix and ATV: 40% of purchases from new customers; virtual consults yielding higher conversion and higher ATV; younger, more multi-cultural customer profile .
Bridal demand: Strength both online and in-store; higher AUR; strong brands (Neil Lane, Le Vian, Vera Wang) and custom offerings (choose diamond/setting) .
Holiday readiness: Earlier product launches; 90% of SKUs BOPIS; automated ship-from-store; expanded credit and warranty online; marketing balanced across digital/social/linear; shipping costs planned .
Margins outlook: Merchandise margins pressured by clearance penetration; commitment to inventory discipline; no margin guidance given .

Estimates Context

S&P Global Wall Street consensus for Q2 FY2021 (EPS and revenue) was unavailable due to data access limits at query time; therefore, beat/miss vs consensus could not be determined (S&P Global consensus unavailable).
Management did not provide formal financial guidance for H2 FY2021 due to COVID-19 uncertainty .

Key Takeaways for Investors

Digital and virtual selling are driving structural share gains: eCommerce +72% YoY and 300k+ virtual consults with higher conversion/ATV suggest durable omni-channel strength heading into holiday .
Sequential comp momentum is notable: SSS improved from -68.5% in May to positive in late Q2; August prelim +10.9% indicates demand recovery, especially in bridal .
Margin watch: Gross margin compressed to 25.3% on deleverage and ESP revenue timing; clearance mix weighed on merchandise margins—monitor normalization of ESP and promotional cadence .
Liquidity and cost actions de-risk near term: $1.20B cash, inventory down $79M YoY, and >$100M net structural cost savings in FY21 support flexibility for continued digital investment .
Footprint reshaping continues: 293 closures executed, pivot to off-mall and multi-banner formats (James Allen within Jared) to lower occupancy costs and capture demand .
Holiday setup strong: 5x eComm throughput, 90% SKUs BOPIS, expanded financing online, and earlier launches position SIG well; execution is the near-term trading driver .
Guidance absent; estimates unavailable: With formal guidance suspended and consensus unavailable, focus on real-time demand signals (August comps, digital KPIs) and margin trajectory to gauge earnings power .

SIGNET JEWELERS LTD (SIG)·Q2 2021 Earnings Summary