Signet Shines as Lab-Grown Diamonds Reshape Jewelry Demand

Lab-grown diamonds are rapidly reshaping the fashion jewelry landscape and Signet Jewelers Limited SIG is emerging as a clear beneficiary of this structural shift. The company is seeing strong momentum across its core banners, supported by evolving consumer preferences for value-driven, ethically sourced alternatives and a disciplined focus on assortment and pricing.

In the third quarter of fiscal 2026, Signet delivered 3% year-over-year same-store sales growth, marking its third consecutive quarter of positive comps. Results were even stronger at its three largest brands — Kay, Zales and Jared — which posted a combined 6% same-store sales increase. This outperformance reflects Signet’s emphasis on its core business, with growth across both bridal and fashion categories. Lab-grown diamonds (LGDs) played a meaningful role in this expansion.

LGDs now represent about 15% of fashion jewelry sales, nearly double from last year’s penetration. Adoption is being driven by younger and mid-tier consumers, particularly at accessible price points below $1,000. Management noted that LGDs are helping close historical assortment gaps while also supporting higher average unit retail (AUR).

Pricing trends highlight this benefit. Fashion AUR increased 8% year over year, driven by a favorable mix toward higher-AUR LGD fashion and elevated gold prices. Bridal AUR rose 6%, reflecting a growing mix of lab-grown wedding and anniversary bands, which carry higher price points than traditional bands. Together, these trends show LGDs are enhancing both volume and sales quality.

The fashion category continues to outperform, with Jared delivering 10% comparable sales growth, supported by strength in diamond, gold and men’s jewelry. LGD fashion is proving to be both a traffic driver and a margin-accretive category.

Beyond sales, LGDs are supporting margins. Signet reported 80 basis points of merchandise margin expansion, aided by refined pricing, reduced promotions and a favorable mix shift toward LGD fashion, helping offset tariff and gold-cost pressures. Looking ahead, management sees a long runway for LGDs as a key driver of outsized fashion growth.

SIG’s Price Performance, Valuation & Estimates

The SIG stock has risen 15.9% over the past six months compared with the industry’s growth of 16.6%.

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Signet’s forward 12-month price-to-sales ratio of 0.55 reflects a lower valuation compared with the industry’s average of 0.96X.

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The Zacks Consensus Estimate for SIG’s fiscal 2026 earnings implies a year-over-year rise of 3.1% and the same for fiscal 2027 indicates growth of 11.3%. Estimates for fiscal 2026 and 2027 have been unchanged in the past 30 days.

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Signet currently carries a Zacks Rank #2 (Buy).

Stocks to Consider

Some better-ranked stocks in the retail space are FIGS Inc. FIGS, American Eagle Outfitters Inc. AEO and The Gap, Inc. GAP. 

FIGS is a direct-to-consumer healthcare apparel and lifestyle brand. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for FIGS’ current financial-year earnings and sales suggests growth of 450% and 7%, respectively, from the year-ago actuals. FIGS delivered a trailing four-quarter average earnings surprise of 87.5%.

American Eagle is a specialty retailer of casual apparel, accessories and footwear. It sports a Zacks Rank of 1 at present.

The Zacks Consensus Estimate for American Eagle's current fiscal-year earnings and sales suggests a decline of 23.6% and growth of 2.4%, respectively, from the year-ago actuals. AEO delivered a trailing four-quarter average earnings surprise of 35.1%.

Gap is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products. It currently flaunts a Zacks Rank of 1.

The Zacks Consensus Estimate for Gap’s fiscal 2026 earnings and sales implies a decline of 2.7% and growth of 1.8%, respectively, from the year-ago actuals. Boot Barn delivered a trailing four-quarter average earnings surprise of 19.1%.

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This article originally published on Zacks Investment Research (zacks.com).

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