Signet: A Sparkly Swindle?

Now, listen closely. There are certain companies, see, that manage to polish a rather ordinary lump of coal into something resembling a diamond. Signet Jewelers, they’re one of those. Lately, they’ve been doing a jig, a proper little dance of success, while most sensible businesses have been looking rather glum. It’s enough to make a sensible investor raise a suspicious eyebrow, wouldn’t you agree?

This Signet, they own a whole collection of shops – Zales, Kay, Jared, even a place called Pagoda (sounds like a villain from a penny dreadful). They’re everywhere, these shops, lurking in shopping centres like glittering spiders, waiting to catch unsuspecting customers. And now they’ve got their hands on online sellers too, like Blue Nile and Diamonds Direct. Two thousand six hundred shops around the world! It’s a monstrous number, really. Enough to give you the shivers.

The past year? A proper bonanza for them. Sales went up, a little tickle of 3%. But the earnings! Oh, the earnings went absolutely bananas, leaping up by 162%. It’s enough to make you wonder what dreadful secrets they’re hiding in the vault. They’ve been playing a clever game, you see, a very clever game indeed.

Their shares have zoomed upwards, a whopping 92% in the last year. Already up 17% this year alone. It’s a bit like watching a particularly greedy snail race towards a lettuce leaf. You know it’s going to happen, but you still can’t help but feel a little… uneasy.

And what’s the secret ingredient in this sparkly potion? Lab-grown diamonds. LGDs, they call them. A rather clinical name for something that’s essentially… manufactured sparkle. But clever, oh so clever. They cost peanuts to make, yet they can charge a king’s ransom for them. It’s a bit like selling air in a fancy bottle, wouldn’t you say?

These LGDs now make up 15% of their fashion sales, double what it was last year. And for engagement rings? A whopping 40%. They’re practically giving away hope in sparkly little boxes. It also means they can control the supply, which is a rather nasty trick, if you ask me. Keeps the prices nice and high.

Their gross margin has grown by 130 basis points to 37.3%. That’s a fancy way of saying they’re squeezing every last penny out of their customers. Like a particularly determined lemon juicer.

Is It Too Late to Join the Party?

The share price has jumped, yes, but not just because of these earnings. They’ve also been promising even more riches in the future. And, of course, there’s Valentine’s Day. Apparently, people are expected to spend a staggering $7 billion on jewelry. A truly alarming amount of money, when you think about it. All for a bit of sparkle.

Signet will reveal their latest earnings on March 19th. That’s when we’ll see if this whole glittering façade is about to crumble. They’ll also tell us what they expect for the year ahead. A bit of forward guidance, they call it. More like a carefully constructed illusion, if you ask me.

Analysts predict a 13% increase in earnings next year, with revenue rising by a measly 1%. That seems a bit… optimistic, doesn’t it? Like predicting a rainbow will last all day. But they’ll say what they need to say.

The jewelry industry, overall, is expected to grow at 4-5% a year until 2028. Lab-grown diamonds, however, are predicted to grow at a much faster rate – 15-16%. That’s where the real money is, you see. In the manufactured sparkle. It’s a bit like a particularly clever scheme, wouldn’t you agree?

So, the jewelry business looks like a good bet, and Signet is currently leading the charge. But don’t be fooled by the glitter. It’s a bit like a magician’s trick. You see the sparkle, but you don’t see the mechanics.

Even with the recent surge, Signet’s shares still look… reasonably priced. They’re trading at just 9 times forward earnings. A bargain, some might say. But remember, every bargain has a catch. It might be worth taking a look before the earnings are revealed on March 19th. But proceed with caution. This is a game for those who understand the rules, and know when to walk away.

2026-02-26 00:05

Is It Too Late to Join the Party?

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