Financial Data and Key Metrics Changes - Revenue for the quarter was over $1.5 billion, with same-store sales growth of 2%, driven by growth in fashion and services [16][19] - Adjusted operating income grew more than 20% to $85 million, with adjusted EPS at $1.61, a 29% increase from last year [19][24] - Gross margin rate expanded by 60 basis points year-over-year, with merchandise margin expansion contributing to this growth [17][18] Business Line Data and Key Metrics Changes - Fashion delivered a 2% same-store sales growth, with lab-grown diamond (LGD) products showing strong performance, particularly at key gifting price points [16][19] - Services grew over 7% in the quarter, led by higher attachment rates of extended service agreements [16] - Bridal comps were roughly flat, but the three largest brands delivered mid-single-digit revenue growth [16] Market Data and Key Metrics Changes - LGD fashion penetration grew to approximately 14% of fashion sales, indicating a significant increase in customer interest [5][48] - The company expects to triple the number of LGD fashion pieces priced below $1,000 compared to last year [13][19] - The impact of tariffs, particularly from India, has been a concern, with current tariffs at 50% due to recent increases [25][80] Company Strategy and Development Direction - The company is focused on its "Grow Brand Love" strategy, emphasizing distinct merchandise, enhanced marketing, and unique customer experiences [3][5] - There is a strong emphasis on modernizing brands like Kay and Zales to attract a younger audience and increase repeat purchases [9][10] - The marketing strategy has shifted to a full-funnel approach, with increased spending on social media channels [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the holiday season with the right merchandise assortment and marketing campaigns [12][26] - The company is optimistic about consumer spending during the holiday season, despite a measured consumer environment [66][71] - Management highlighted the importance of maintaining strong supplier relationships to mitigate tariff impacts [32][79] Other Important Information - The company repurchased approximately $32 million of shares in the quarter, with a total of roughly $150 million year-to-date [20] - The balance sheet remains strong, with cash ending the quarter at $281 million and total liquidity exceeding $1.4 billion [19][20] - The company is actively evaluating the positioning of its digital brands, particularly Blue Nile and James Allen, to improve performance [21][22] Q&A Session Summary Question: Can you talk about the driver of AUR in both bridal and fashion? - Management indicated that mix is largely driving AUR growth, with lab-grown diamonds expanding the category [28][29] Question: How are you thinking about the potential wrap-around into the first half of 2026 regarding tariffs? - Management noted that they have tools to mitigate tariff impacts and are well-positioned to manage costs [31][32] Question: Can you give us an update on the bridal business? - Management reported positive AUR trends in bridal, with a focus on higher carat weights and milestone gifting [37][39] Question: What are your plans for marketing into the holiday season for bridal? - Management emphasized a company-wide effort to reduce discounting and improve pricing strategies across brands [41][42] Question: Can you elaborate on your third quarter performance? - Management stated that the third quarter guidance is measured, reflecting various factors, but they are pleased with the momentum [64][66] Question: How did the lab-grown diamond business perform in the second quarter? - Management reported a 14% penetration rate in fashion for lab-grown diamonds, with positive margin performance [72][73]