Signet(SIG) - 2026 Q2 - Quarterly Results

Executive Summary & Highlights Signet Jewelers delivered strong Q2 Fiscal 2026 results exceeding guidance, driven by effective strategies that led to raised full-year forecasts Q2 Fiscal 2026 Performance Highlights The company exceeded guidance with sales growth, positive same-store sales, and significant increases in adjusted operating income and EPS Q2 FY26 Key Metrics | Metric | Q2 FY26 | Q2 FY25 | Change (YoY) | | :-------------------------- | :-------- | :-------- | :----------- | | Sales | $1.5 billion | $1.491 billion | +3.0% | | Same Store Sales (SSS) | +2.0% | -3.4% | +5.4 pp | | Merchandise AUR | +9% | N/A | N/A | | Operating Income (GAAP) | $2.8 million | $(100.9) million | Significant improvement | | Adjusted Operating Income | $85.4 million | $68.6 million | +24.5% | | Diluted Loss Per Share (GAAP) | $(0.22) | $(2.28) | Significant improvement | | Adjusted Diluted EPS | $1.61 | $1.25 | +28.8% | - Merchandise Average Unit Retail (AUR) increased by 9%, with Bridal up 4% and Fashion up 12%[3] - Diluted loss per share includes $2.01 of non-cash impairment charges, primarily related to Digital brands and restructuring[3] Management Commentary Management attributed strong performance to fashion assortment and promotional strategies, leading to raised full-year guidance - CEO J.K. Symancyk emphasized the expansion of on-trend fashion assortment and effective promotion/pricing strategies, leading to a combined same-store sales increase of 5% at Kay, Zales, and Jared[2] - CFO Joan Hilson reported over 20% growth in Adjusted Operating Income, driven by comparable sales growth, gross margin expansion, and cost savings from reorganization[2] - The company is raising its Fiscal 2026 guidance, reflecting strong Q2 results and Q3 expectations, while assuming a measured consumer environment[2] Financial Performance Overview The company demonstrated significant year-over-year financial improvement with sales growth, margin expansion, and a return to GAAP profitability Key Financial Metrics (Q2 & YTD FY26 vs FY25) Signet showed significant financial improvement in Q2 and YTD FY26, with positive sales growth and a return to GAAP profitability Financial Metrics Summary | (in millions, except per share amounts) | Q2 Fiscal 2026 | Q2 Fiscal 2025 | YTD Fiscal 2026 | YTD Fiscal 2025 | | :------------------------------------ | :------------- | :------------- | :-------------- | :-------------- | | Sales | $1,535.1 | $1,491.0 | $3,076.7 | $3,001.8 | | SSS % change | 2.0 % | (3.4)% | 2.2 % | (6.2)% | | GAAP Operating income (loss) | $2.8 | $(100.9) | $50.9 | $(51.1) | | Operating margin | 0.2 % | (6.8)% | 1.7 % | (1.7)% | | Diluted EPS (loss per share) | $(0.22) | $(2.28) | $0.58 | $(3.17) | | Adjusted operating income | $85.4 | $68.6 | $155.7 | $126.4 | | Adjusted operating margin | 5.6 % | 4.6 % | 5.1 % | 4.2 % | | Adjusted diluted EPS | $1.61 | $1.25 | $2.77 | $2.35 | Detailed Q2 Fiscal 2026 Results Q2 FY26 profitability improved through gross margin expansion and SG&A leverage, driving a return to positive GAAP operating income Gross Margin and SG&A Gross margin expanded due to improved merchandise margin and cost leverage, while SG&A as a percentage of sales decreased Margin and Expense Analysis | Metric | Q2 Fiscal 2026 | Q2 Fiscal 2025 | Change (YoY) | | :---------------- | :------------- | :------------- | :----------- | | Gross Margin | $591.9 million | $566.3 million | +$25.6 million | | Gross Margin Rate | 38.6% | 38.0% | +60 bps | | SG&A | $505.3 million | $498.4 million | +$6.9 million | | SG&A as % of Sales | 32.9% | 33.4% | -50 bps | Operating Income The company achieved positive GAAP operating income, a significant turnaround from the prior year, despite substantial non-cash impairment charges Operating Income Analysis | Metric | Q2 Fiscal 2026 | Q2 Fiscal 2025 | Change (YoY) | | :---------------------- | :------------- | :------------- | :----------- | | Operating Income (GAAP) | $2.8 million | $(100.9) million | +$103.7 million | | Operating Margin (GAAP) | 0.2% | (6.8)% | +7.0 pp | | Adjusted Operating Income | $85.4 million | $68.6 million | +$16.8 million | | Adjusted Operating Margin | 5.6% | 4.6% | +1.0 pp | - GAAP operating income for Q2 FY26 includes approximately $80 million of non-cash impairment charges, primarily related to Digital brands, and restructuring charges[6] Income Tax and Net Loss/EPS Adjusted diluted EPS increased due to higher operating income and a lower share count, offsetting a higher effective tax rate Tax and EPS Analysis | Metric | Q2 Fiscal 2026 | Q2 Fiscal 2025 | Change (YoY) | | :-------------------------- | :------------- | :------------- | :----------- | | Income Tax Expense (GAAP) | $14.2 million | $1.6 million | +$12.6 million | | Adjusted Income Tax Expense | $21.4 million | $13.3 million | +$8.1 million | | Diluted Loss Per Share (GAAP) | $(0.22) | $(2.28) | +$2.06 | | Adjusted Diluted EPS | $1.61 | $1.25 | +$0.36 | - The current quarter's diluted loss per share includes $2.01 of charges related to impairment and restructuring[8] Balance Sheet and Cash Flow Summary The company improved operating cash flow year-to-date, reducing cash usage, while inventory levels remained stable Cash Flow Summary | Metric | Fiscal 2026 YTD | Fiscal 2025 YTD | | :-------------------------------- | :-------------- | :-------------- | | Cash used in operating activities | $89.0 million | $114.4 million | Balance Sheet Summary | Metric | As of August 2, 2025 | As of August 2, 2024 | | :------------------------ | :------------------- | :------------------- | | Cash and cash equivalents | $281.4 million | $403.1 million | | Inventory | $2.0 billion | $1.977 billion | Capital Returns and Dividends Signet continued its capital return program through share repurchases and declared a quarterly cash dividend for Q3 FY26 Share Repurchase Activity | Metric | Q2 Fiscal 2026 | YTD Fiscal 2026 | | :-------------------------------- | :------------- | :-------------- | | Common Shares Repurchased | 446,000 | 2.5 million | | Value of Shares Repurchased | $32 million | $150 million | | Share Repurchase Authorization Remaining | $570 million | N/A | - A quarterly cash dividend of $0.32 per share was declared for the third quarter of Fiscal 2026, payable November 21, 2025[11] Business Segment Performance The North America segment drove overall sales growth and a significant improvement in operating income, while the International segment also grew Sales by Segment The North America segment led sales growth with a 2.1% increase, while the International segment's growth was boosted by favorable currency translation Q2 FY26 Sales Performance by Segment | Second Quarter of Fiscal 2026 | Same store sales | Non-same store sales, net | Total sales at constant exchange rate | Exchange translation impact | Total sales as reported | Total sales (in millions) | | :---------------------------- | :--------------- | :------------------------ | :------------------------------------ | :-------------------------- | :---------------------- | :------------------------ | | North America segment | 2.0 % | 0.1 % | 2.1 % | — % | 2.1 % | $1,426.7 | | International segment | 0.8 % | (0.4)% | 0.4 % | 5.7 % | 6.1 % | $91.8 | | Other segment | nm | nm | nm | nm | nm | $16.6 | | Signet | 2.0 % | 0.6 % | 2.6 % | 0.4 % | 3.0 % | $1,535.1 | Operating Income by Segment The North America segment returned to positive GAAP operating income and grew adjusted operating income, while the International segment's loss was stable Q2 Operating Income (Loss) by Segment (GAAP) | Operating income (loss) in millions | Second quarter Fiscal 2026 | Second quarter Fiscal 2025 | | :---------------------------------- | :------------------------- | :------------------------- | | North America segment | $23.0 (1.6% of sales) | $(77.2) (-5.5% of sales) | | International segment | $(2.2) (-2.4% of sales) | $(4.2) (-4.9% of sales) | | Other segment | $(0.4) | $(2.6) | | Corporate and unallocated expenses | $(17.6) | $(16.9) | | Total operating income | $2.8 (0.2% of sales) | $(100.9) (-6.8% of sales) | Q2 Adjusted Operating Income (Loss) by Segment | Adjusted operating income (loss) in millions | Second quarter Fiscal 2026 | Second quarter Fiscal 2025 | | :----------------------------------------- | :------------------------- | :------------------------- | | North America segment | $103.8 (7.3% of sales) | $90.1 (6.4% of sales) | | International segment | $(2.1) (-2.3% of sales) | $(2.0) (-2.3% of sales) | | Other segment | $(0.4) | $(2.6) | | Corporate and unallocated expenses | $(15.9) | $(16.9) | | Total adjusted operating income | $85.4 (5.6% of sales) | $68.6 (4.6% of sales) | Real Estate Portfolio Signet's real estate portfolio saw a slight reduction in store count and selling space, reflecting ongoing optimization efforts - As of August 2, 2025, Signet operated 2,623 stores, a decrease of 19 stores from year-end Fiscal 2025[28][29] - Total selling space decreased by 0.2% to 4.0 million square feet compared to year-end Fiscal 2025[28] Store Count Activity | Store count by segment | February 1, 2025 | Openings | Closures | August 2, 2025 | | :--------------------- | :--------------- | :------- | :------- | :------------- | | North America segment | 2,379 | 8 | (23) | 2,364 | | International segment | 263 | — | (4) | 259 | | Signet | 2,642 | 8 | (27) | 2,623 | Outlook and Fiscal 2026 Guidance The company raised its full-year Fiscal 2026 guidance across key metrics, reflecting strong Q2 results and current market conditions Third Quarter Fiscal 2026 Guidance Signet anticipates Q3 sales between $1.34 billion and $1.38 billion, with same-store sales ranging from a slight decrease to a slight increase Q3 FY26 Guidance | Metric | Third Quarter Fiscal 2026 Guidance | | :---------------------- | :------------------------------- | | Total sales | $1.34 to $1.38 billion | | Same store sales | (1.25%) to +1.25% | | Adjusted operating income | $3 to $17 million | | Adjusted EBITDA | $49 to $63 million | Full Year Fiscal 2026 Guidance Update Signet raised its full-year Fiscal 2026 guidance for sales, same-store sales, adjusted operating income, and adjusted diluted EPS FY26 Guidance Comparison | Metric | Updated Fiscal 2026 Guidance | Previous Fiscal 2026 Guidance | | :---------------------- | :--------------------------- | :---------------------------- | | Total sales | $6.67 to $6.82 billion | $6.57 to $6.80 billion | | Same store sales | (0.75%) to +1.75% | (2.0%) to +1.5% | | Adjusted operating income | $445 to $515 million | $430 to $510 million | | Adjusted EBITDA | $630 to $700 million | $615 to $695 million | | Adjusted diluted EPS | $8.04 to $9.57 | $7.70 to $9.38 | Guidance Assumptions and Sustainability The FY26 guidance assumes a measured consumer environment, potential tariff impacts, and planned capital expenditures - Guidance assumes a measured consumer environment with variability in holiday spending[15] - Adjusted operating income is sensitive to India's combined tariff rate; removal of the Russian trade penalty could lead to the upper half of the guidance range[15] - Planned capital expenditures are approximately $145 to $160 million, with a net square footage decrease of about 1% for the year[15] - Signet celebrates its 27th anniversary of supporting St. Jude Children's Research Hospital, having raised over $110 million to date[14] Corporate Information Signet Jewelers is the world's largest diamond jewelry retailer, operating under various well-known brands with a focus on sustainability About Signet Jewelers Signet Jewelers Limited is the world's largest retailer of diamond jewelry, operating approximately 2,600 stores under various brand names - Signet Jewelers is the world's largest retailer of diamond jewelry, operating approximately 2,600 stores[17] - Key brand names include Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, Blue Nile, James Allen, Rocksbox, Peoples Jewellers, H. Samuel, and Ernest Jones[17] - The company is purpose-driven and sustainability-focused, adhering to the principles of the United Nations Global Compact[17] Safe Harbor Statement and Risk Factors The release contains forward-looking statements subject to various risks including strategic execution, tariffs, economic conditions, and supply chain disruptions - Forward-looking statements are identified by words like 'guidance,' 'expects,' 'anticipates,' and 'will,' and are not guarantees of future performance[18] - Key risks include executing business initiatives, attracting talent, mitigating tariff impacts, economic conditions, consumer spending shifts, supply chain disruptions, and regulatory changes[18][19] - Investors are directed to the 'Risk Factors' and 'Forward-Looking Statements' sections of Signet's Fiscal 2025 Annual Report on Form 10-K for a comprehensive discussion of risks[20] Conference Call Details A conference call was scheduled for September 2, 2025, with webcast and replay available on the company's website - Conference call held on September 2, 2025, at 8:30 a.m. ET, with webcast available at www.signetjewelers.com[16](index=16&type=chunk) - Call details provided for North America (toll-free) and International locations, with Conference ID 85359[16] Investor and Media Contacts Contact information for investor relations and media inquiries is provided for stakeholders seeking further information - Investor Relations contact: Rob Ballew, Senior Vice President, Investor Relations & Capital Markets (robert.ballew@signetjewelers.com or investorrelations@signetjewelers.com)[21] - Media contact: Colleen Rooney, Chief Corporate Affairs & Sustainability Officer (colleen.rooney@signetjewelers.com, +1-330-668-5932)[22] Condensed Consolidated Financial Statements (Unaudited) The unaudited financial statements detail the company's operating performance, financial position, and cash flows for the reporting periods Condensed Consolidated Statements of Operations The statements detail revenues, costs, and profitability, highlighting the shift from operating loss to income and the impact of asset impairments Statements of Operations | (in millions, except per share amounts) | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Sales | $1,535.1 | $1,491.0 | $3,076.7 | $3,001.8 | | Cost of sales | (943.2) | (924.7) | (1,886.0) | (1,863.1) | | Gross margin | 591.9 | 566.3 | 1,190.7 | 1,138.7 | | Selling, general and administrative expenses | (505.3) | (498.4) | (1,031.3) | (1,013.8) | | Asset impairments, net | (80.2) | (166.2) | (83.4) | (168.6) | | Other operating expense, net | (3.6) | (2.6) | (25.1) | (7.4) | | Operating income (loss) | 2.8 | (100.9) | 50.9 | (51.1) | | Interest (expense) income, net | (0.1) | 2.4 | 0.7 | 11.0 | | Other non-operating income (expense), net | 2.4 | 1.6 | (0.9) | 1.8 | | Income (loss) before income taxes | 5.1 | (96.9) | 50.7 | (38.3) | | Income taxes | (14.2) | (1.6) | (26.3) | (8.1) | | Net (loss) income | $(9.1) | $(98.5) | $24.4 | $(46.4) | | Dividends on redeemable convertible preferred shares | — | (3.0) | — | (95.2) | | Net (loss) income attributable to common shareholders | $(9.1) | $(101.5) | $24.4 | $(141.6) | | Earnings (loss) per common share: Basic | $(0.22) | $(2.28) | $0.58 | $(3.17) | | Diluted | $(0.22) | $(2.28) | $0.58 | $(3.17) | | Weighted average common shares outstanding: Basic | 41.1 | 44.5 | 41.8 | 44.6 | | Diluted | 41.1 | 44.5 | 42.0 | 44.6 | | Dividends declared per common share | $0.32 | $0.29 | $0.64 | $0.58 | Condensed Consolidated Balance Sheets The balance sheets present Signet's financial position, detailing assets, liabilities, and equity, and showing a decrease in cash and total liabilities Balance Sheets | (in millions) | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :-------------------------------------------------- | :------------- | :--------------- | :------------- | | Assets | | | | | Current assets: Cash and cash equivalents | $281.4 | $604.0 | $403.1 | | Inventories | 1,986.6 | 1,937.3 | 1,977.2 | | Income taxes | 29.7 | 14.3 | 9.2 | | Other current assets | 166.8 | 156.6 | 186.2 | | Total current assets | 2,464.5 | 2,712.2 | 2,575.7 | | Non-current assets: Property, plant and equipment, net | 477.7 | 506.5 | 470.5 | | Operating lease right-of-use assets | 1,102.5 | 1,102.4 | 956.2 | | Goodwill | 428.4 | 482.0 | 631.5 | | Intangible assets, net | 291.5 | 307.2 | 358.9 | | Other assets | 286.1 | 314.8 | 320.3 | | Deferred tax assets | 292.1 | 301.5 | 300.7 | | Total assets | $5,342.8 | $5,726.6 | $5,613.8 | | Liabilities, Redeemable convertible preferred shares, and Shareholders' equity | | | | | Current liabilities: Accounts payable | $512.7 | $767.0 | $547.6 | | Accrued expenses and other current liabilities | 388.4 | 366.8 | 363.1 | | Deferred revenue | 360.7 | 362.5 | 347.8 | | Operating lease liabilities | 290.4 | 279.9 | 250.9 | | Income taxes | 49.0 | 55.3 | 17.6 | | Total current liabilities | 1,601.2 | 1,831.5 | 1,527.0 | | Non-current liabilities: Operating lease liabilities | 887.3 | 900.0 | 793.5 | | Other liabilities | 76.9 | 85.1 | 90.5 | | Deferred revenue | 885.5 | 885.1 | 874.0 | | Deferred tax liabilities | 163.6 | 173.1 | 188.5 | | Total liabilities | 3,614.5 | 3,874.8 | 3,473.5 | | Commitments and contingencies | | | | | Redeemable Series A Convertible Preference Shares | — | — | 223.1 | | Shareholders' equity: Common shares | 12.6 | 12.6 | 12.6 | | Additional paid-in capital | 110.0 | 120.1 | 165.2 | | Other reserves | 0.4 | 0.4 | 0.4 | | Treasury shares at cost | (1,882.4) | (1,749.3) | (1,659.7) | | Retained earnings | 3,743.1 | 3,745.5 | 3,664.6 | | Accumulated other comprehensive loss | (255.4) | (277.5) | (265.9) | | Total shareholders' equity | 1,728.3 | 1,851.8 | 1,917.2 | | Total liabilities, redeemable convertible preferred shares and shareholders' equity | $5,342.8 | $5,726.6 | $5,613.8 | Condensed Consolidated Statements of Cash Flows The company significantly reduced cash used in operating and financing activities compared to the prior year Statements of Cash Flows | (in millions) | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :-------------------------------------------------- | :---------------------------- | :---------------------------- | | Operating activities: Net income (loss) | $24.4 | $(46.4) | | Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization | 74.0 | 74.5 | | Amortization of unfavorable contracts | (0.9) | (0.9) | | Share-based compensation | 13.7 | 18.3 | | Deferred taxation | 2.0 | (13.1) | | Asset impairments, net | 83.4 | 168.6 | | Other non-cash movements | 3.5 | 3.1 | | Changes in operating assets and liabilities: Inventories | (35.9) | (41.4) | | Other assets | 14.0 | 33.2 | | Accounts payable | (248.5) | (193.3) | | Accrued expenses and other liabilities | 10.1 | (36.1) | | Change in operating lease assets and liabilities | (3.8) | (6.8) | | Deferred revenue | (3.1) | (22.1) | | Income tax receivable and payable | (21.9) | (52.0) | | Net cash used in operating activities | $(89.0) | $(114.4) | | Investing activities: Capital expenditures | (60.6) | (51.3) | | Other investing activities, net | (0.1) | (5.9) | | Net cash used in investing activities | $(60.7) | $(57.2) | | Financing activities: Dividends paid on common shares | (25.8) | (23.1) | | Dividends paid on redeemable convertible preferred shares | — | (14.4) | | Repurchase of common shares | (149.7) | (47.2) | | Repurchase of redeemable convertible preferred shares | — | (541.0) | | Repayment of Senior Notes | — | (147.8) | | Other financing activities, net | (7.1) | (28.4) | | Net cash used in financing activities | $(182.6) | $(801.9) | | Cash and cash equivalents at beginning of period | 604.0 | 1,378.7 | | Decrease in cash and cash equivalents | (332.3) | (973.5) | | Effect of exchange rate changes on cash and cash equivalents | 9.7 | (2.1) | | Cash and cash equivalents at end of period | $281.4 | $403.1 | Non-GAAP Financial Measures and Reconciliations This section defines non-GAAP measures and provides reconciliations to GAAP figures to offer additional insight into operational performance Definition of Non-GAAP Measures Signet utilizes non-GAAP measures to provide investors with additional insights into underlying business trends and operational performance - Non-GAAP measures are provided to assist investors in evaluating historical trends, current performance, and liquidity[31] - Key non-GAAP measures include sales changes on a constant currency basis, free cash flow, adjusted operating income/margin, adjusted diluted EPS, and adjusted EBITDA[32] - These measures exclude impacts of foreign currency fluctuations, capital expenditures, and certain items not reflective of normal operational performance[33][34][35][36][37] Free Cash Flow Reconciliation Free cash flow improved year-to-date, indicating a reduced cash outflow compared to the prior year Free Cash Flow | (in millions) | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :-------------------------- | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(89.0) | $(114.4) | | Capital expenditures | (60.6) | (51.3) | | Free cash flow | $(149.6) | $(165.7) | Adjusted Operating Income Reconciliation Adjusted operating income improved significantly after excluding substantial asset impairments and restructuring charges from GAAP results Total Adjusted Operating Income | (in millions) | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :-------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Total operating income (loss) | $2.8 | $(100.9) | $50.9 | $(51.1) | | Asset impairments | 79.8 | 166.2 | 83.0 | 168.1 | | Restructuring and related charges | 2.8 | 1.2 | 21.8 | 5.8 | | Loss on divestitures, net | — | 1.2 | — | 2.5 | | Integration-related expenses | — | 0.9 | — | 1.1 | | Total adjusted operating income | $85.4 | $68.6 | $155.7 | $126.4 | North America Segment Adjusted Operating Income | North America segment adjusted operating income (in millions) | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :---------------------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | North America segment operating income (loss) | $23.0 | $(77.2) | $106.0 | $6.0 | | Asset impairments | 79.8 | 166.2 | 83.0 | 167.4 | | Restructuring and related charges | 1.0 | 0.2 | 11.9 | 0.8 | | Integration-related expenses | — | 0.9 | — | 1.1 | | North America segment adjusted operating income | $103.8 | $90.1 | $200.9 | $175.3 | International Segment Adjusted Operating Loss | International segment adjusted operating loss (in millions) | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :---------------------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | International segment operating loss | $(2.2) | $(4.2) | $(9.2) | $(17.2) | | Restructuring and related charges | 0.1 | 1.0 | 0.1 | 5.0 | | Asset impairments | — | — | — | 0.7 | | Loss on divestitures, net | — | 1.2 | — | 2.5 | | International segment adjusted operating loss | $(2.1) | $(2.0) | $(9.1) | $(9.0) | Adjusted Income Tax and Effective Tax Rate Reconciliation The adjusted effective tax rate was significantly lower than the GAAP rate after accounting for the tax effects of non-GAAP adjustments Adjusted Income Tax Expense | (in millions) | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :-------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Income tax expense | $14.2 | $1.6 | $26.3 | $8.1 | | Asset impairments | 6.5 | 10.8 | 7.3 | 11.3 | | Restructuring and related charges | 0.7 | 0.4 | 5.4 | 1.5 | | Loss on divestitures, net | — | 0.3 | — | 0.6 | | Integration-related expenses | — | 0.2 | — | 0.2 | | Adjusted income tax expense | $21.4 | $13.3 | $39.0 | $21.7 | Adjusted Effective Tax Rate | | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :-------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Effective tax rate | 278.4 % | (1.7)% | 51.9 % | (21.1)% | | Asset impairments | (229.3)% | 18.5 % | (15.4)% | 30.5 % | | Restructuring and related charges | (24.7)% | 0.7 % | (11.4)% | 4.1 % | | Loss on divestitures, net | — % | 0.5 % | — % | 1.6 % | | Integration-related expenses | — % | 0.3 % | — % | 0.5 % | | Adjusted effective tax rate | 24.4 % | 18.3 % | 25.1 % | 15.6 % | Adjusted Diluted EPS Reconciliation Adjusted diluted EPS of $1.61 for Q2 FY26 reflects a substantial improvement over the GAAP loss after excluding non-operational charges Adjusted Diluted EPS | | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Diluted EPS (loss per share) | $(0.22) | $(2.28) | $0.58 | $(3.17) | | Asset impairments | 1.94 | 3.73 | 1.97 | 3.77 | | Restructuring and related charges | 0.07 | 0.03 | 0.52 | 0.13 | | Loss on divestitures, net | — | 0.03 | — | 0.06 | | Integration-related expenses | — | 0.02 | — | 0.02 | | Tax impact of above items | (0.18) | (0.26) | (0.30) | (0.30) | | Deemed dividend on redemption of Preferred Shares | — | — | — | 1.91 | | Dilution effect | — | (0.02) | — | (0.07) | | Adjusted diluted EPS | $1.61 | $1.25 | $2.77 | $2.35 | Adjusted EBITDA Reconciliation Adjusted EBITDA increased for both Q2 and YTD Fiscal 2026, reflecting improved underlying operating performance Adjusted EBITDA | (in millions) | 13 weeks ended August 2, 2025 | 13 weeks ended August 3, 2024 | 26 weeks ended August 2, 2025 | 26 weeks ended August 3, 2024 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net (loss) income | $(9.1) | $(98.5) | $24.4 | $(46.4) | | Income taxes | 14.2 | 1.6 | 26.3 | 8.1 | | Interest expense (income), net | 0.1 | (2.4) | (0.7) | (11.0) | | Depreciation and amortization | 37.0 | 37.9 | 74.0 | 74.5 | | Amortization of unfavorable contracts | (0.4) | (0.4) | (0.9) | (0.9) | | Other non-operating (income) expense, net | (2.4) | (1.6) | 0.9 | (1.8) | | Share-based compensation | 6.7 | 10.7 | 13.7 | 18.3 | | Other accounting adjustments | 82.6 | 169.5 | 104.8 | 177.5 | | Adjusted EBITDA | $128.7 | $116.8 | $242.5 | $218.3 |