Signet Jewelers Ltd (SIG) March 9, 2026 Conference Transcript

Thanks, everybody, for being here. I'm here with the Cignet management team, J.K. Simancic, CEO, and Jackson Speak, Global Head of FP&A. Thank you guys for being here, supporting the conference. You've released some preliminary results for the fourth quarter today, first time that we've heard from you about this past holiday season. Maybe start there. What can you tell us about the quarter and how it all played out?

Yeah, no, I appreciate it. Thanks for the opportunity to be here. I think the benefit, honestly, is we'll report final numbers next week on the 19th. I think the chance to be here and talk a little bit about the quarter, not only Q4, but also quarter date, what we've seen at the start of the year is nice, which also sort of frees us up, you know, cliffhanger, to spend a little bit more time talking about fiscal year 27 guide and strategic priorities. um next week when when we get into to the final numbers but uh overall uh feel feel good about uh the quarter particularly given where it started i mean i i think uh you know as we reported our q3 numbers we were you know pretty deep into november and and you know had had it behind us and and uh obviously consumer you know had a bit of a hiccup in november and and i think like a lot lot of us, you know, we found ourselves in a spot where a little bit of a trend change from where we were. And, you know, what we saw, though, was sequential improvement across the quarter month by month on both the one and a two-year stack basis. And, you know, a reaction to what, you know, started with some of the pressures around government shutdown and the pressures that we saw with lower and middle income customers. But a strong holiday selling marked by the 10 peak days of Christmas are really critical for us. So having positive comps during that window were really important. We saw that continue to build through January. Actually, like a lot, took a little bit of a hit at the end of the quarter with winter storm fern. Actually, we're setting uh at a positive on the quarter actually heading into that so uh strong uh build and then you know we've seen the business uh continue to to perform as we've come through valentine's day quarter to date um within the quarter itself um i think um you know the uh the with a little bit more measured consumer environment we did see a little bit more promotional activity and and i think the you know that that resulted we we called out a little bit of of margin uh uh give back or or decline in part because we had called for a little bit of expansion it was it was modest and and i think we you know we shared it paul more to to give us permission to talk about it uh but but structurally not not a significant thing and the nice thing is you know we pulled that through the bottom line with expense management where we deliver you know, operating income at the high end of guides. So feel good about that. Kay, Jared, Blue Nile, Peoples, UK and services, all real bright spots for us in the quarter, all positive comp. You know, some continued drag as you look at James Allen and weather. And then, you know, on the whole, when you look at the full year, I think, you know, our ability to navigate that dynamic environment, particularly with tariffs changing right up until the end. I know you'll probably have a few questions about that, but no way in the world we do that without the reorg that we did earlier in the year and the ability to really manage that and still perform at the high end of guide, actually raising our guide as we go. And then I think the other, you know, our focus on our core brands, KZL's Jared, really performed, you know, well for us over the course of the year. You know, we returned this business to positive comps for the full year for the first time since fiscal year 22. So I'm pleased with what the team did to deliver that. And it was really led by those core brands. We were up over 3% comp in those businesses. And, you know, probably one of the bigger highlights is when you look at the end of the year, we'll generate over 500 million of free cash flow. That is, you know, 20% increase year over year on relatively flat inventory. And in this kind of tariff plus commodity increase environment, I think it speaks volumes to some of the opportunities we've leveraged as it relates to scale across the organization. So, you know, slower start as a lot of people had, but good sequential improvement through and happy to see that momentum carry into the start of the year.

That's a great starting point. You mentioned a lot of things that we'll probably just jump around and touch on a little bit. But consumer behavior, you know, what did you see just in terms of, you know, their behavior leading up to the holiday? You mentioned those 10 days leading up to Christmas. I think last year that was a bit of a challenge for you guys, right, didn't have the right product this year. What did you see in terms of the consumer as they kind of got closer to the holiday and even beyond?

Yeah, I think one of the learnings or realizations for me and our team is a little clearer understanding of the fact that we really operate two businesses. We operate a fine jewelry business 12 months out of the year, and then we operate a gift-giving business during that time period. And certainly we talked a lot about our misses at key price points in the prior holiday. And so it was a big focal point for us as we came into this year. Good news is it worked. I mean, that's part of what contributed to positive comps over those peak days. I think it was harder to be able to deliver that just given the dynamic nature of what was going on with supply chain and tariffs and, you know, frankly, a set of baseline costs that were moving around a lot. And for the most part, it flowed through really well. I would say the one thing, you know, that we look at and can draw from as we move forward is it's harder to deliver meaningful price points below $150, you know. And so, you know, at least with the assortment architecture that we've always had. And so, you know, that disproportionately is where we felt any sort of unit velocity changes. But the work in that $200 to $500 price point and $500 to $1,000 was healthy overall. And we really saw consumers respond to that. Interestingly, we also saw consumers willing to trade up in the right places. And I think that's also an opportunity for us as we look forward to this next year. I think, you know, particularly with Natural Diamond at higher price points, we think there's opportunity for focus and some expansion there. And so, you know, on the whole, I think what we did see, though, was, you know, it did require a little bit more impetus around promo. And, you know, that I think is, you know, we're not alone in that. I think that was a little more of a hallmark of this holiday and particularly that consumer in the middle, the lower end, that felt a little more pressure. And, you know, we managed that well and thankfully did not have the drags on us that we had the prior quarter. So we were able to able to digest it. Yeah.

Can we maybe dig into that a little bit? Because I think coming in, you thought merch margins were going to be up. So you said down, was that any one particular brand or banner or price point where you had to really pull the promotional levers? And was it – did you see it coming from independents, other chains?

I think it's two things. I mean, when you look at – there's really – the way that tariffs played out over the course of the year, you know, typically when we set price for a category. you know, we'll, we'll take price once or twice a year, depending. Typically we would do it. We're in one of those periods right now. We get on the backside of Valentine's day and we really want to set price for the spring. That becomes important because we have to have a rest period after we set prices before we can actually promote against those prices. Right. So typically we would set price somewhere, you know, we would want to have prices set by the end of September so that we're clean and clear to be able to drive promotional strategies for the holiday. I think this last year or this last quarter, the challenge was we had, you know, to do that, you have to have goods landed, but you may not have 100% of the receipts, right? So you've got all the SKUs received, but you may not have all of your inventory in each of those SKUs received. And in many cases, we had landed a particular mix, and then we had tariffs change yet again, or you had commodity costs change yet again. And so you're stuck with the prices that you've set. We've typically aimed a little bit high, but you're planning on mix so that you can promote down. And I think particularly for a brand like K that, you know, I mean, one, we work in an industry that runs on promotion during that time period. But two, you know, for a brand like K, which is really responsive, but tends to live on broad percent off promotions, it's kind of a blunt instrument. You know, you go from 40 to 50 off or you go from 40 to 30 off. Like the ability to be precise if you're trying to massage what unit velocity looks like. There was a little bit of spill, right? And I think that's a function of, you know, that's the best way to manage a really dynamic environment. And to the degree that you're talking about, you know, a small number of basis points moving here or there, manageable. We certainly managed it on the operating income side. I wouldn't look at it as a structural shift in our business. But I also think we learn from it and say, okay, how do we focus a little bit more on items at a price and really build a few more mechanisms for the holiday that allows us to be a little more surgical? That's one thing. I think the other I mentioned, sub $150, I mean, as much as we were focused on key price points, you might have had a little bit of movement across some thresholds in that time period. And if the item that you sold at $150 is now $199 and you're not moving the right unit velocity, you want to move it. And so you make those investments. And the runway to have a full year to manage assortment architecture, I think, gives us a lot more flexibility. I do think rising commodity costs are one of those things we're going to have to manage because it's certainly you feel it a little bit more on the lower end where gold is more of a driver of the component cost. what are the winning categories for the holiday and you know it's a more of a fashion driven period but you know maybe talk you know fashion versus bridal and if there was anything that really stood out in the assortment as being kind of the big winners um big winners i mean i you know believe it or not i mean uh you know i the uh time pieces are are i mean you know the world you know has tried to kill that trend a couple of times but but uh customers are coming back and particularly younger customers um you know within uh within fashion uh lab-grown diamonds still is an opportunity for for growth in large part because it's under penetrated in the category and and so there's a lot of newness that that is driven there um i think um you know essentials you know in a time period where people are a little more uncertain those jewelry box essentials whether it's tennis bracelets studs i mean there is there is a return to basics during that time period that i think is is is probably not a surprise to people i mean same is true in apparel footwear a lot of you know a lot of our fashion categories um and then you know within categories like bridal engagement even fashion um there was you know there was growth all aur driven but trade-up you know those those people who have affluency or have the means or just care enough around that emotional category they showed a a willingness to trade up and spend more for quality during that time period less so a category too but our services business continued positive kind of across all so both on the warranty and repair yeah i mean services contributed half a point of comp on the quarter so i mean it continues to be a source of strength for us and uh attachment rates are higher the more the more you see aur expansion the more you see attachment rates go up but repair actually outpacing warranties as a growth driver.

So, strong. Got it. And I think you mentioned earlier the different banners all performed well, maybe with the exception of James Allen. Can you talk about maybe banner performance and even like Blue Nile specifically? Because I think that was a point of pressure in time last year.

Blue Nile moved positive. James Allen continued to perform as a drag. We'll spend a little bit more time talking about strategies by brand. Um, as we, as we get to, to next week's readout, um, you know, the only other one, I mean, I think we, um, you know, we, we had seen, uh, we had seen greater strength out of Zales the first three quarters and saw a little bit of a, of a, of a pullback in our Zales business, uh, this quarter. And certainly that, you know, a lot of moving parts there. I think one of the lessons or one of the takeaways for us there is, um, we really drove a business through self-purchase through the first three quarters and maybe we're a little too focused on self-purchase and Q4 and the opportunity to broaden the aperture and think about gift giving is, I think, an opportunity for upside for that business. And the good news is made the adjustment, saw the same build and sequential improvement and really returned to what that run rate was before as we got into Valentine's Day. So I think it is a little more of a blip. Also, a little bit more exposure on the lower end with that customer compared to some of our brands so probably felt a little more that hit in november and then we we didn't recover it at probably the same rate there but um feel great about you know the potential as as we move into this year and also about the momentum that we're building there and you know february isn't a super important month for most retailers it is for you you did mention a good valentine's day maybe just talk about what what you saw during that important period for you guys? Um, you know, what we saw was, uh, just more balanced strength across the business. I mean, I think, you know, I, I do think we're in a period where, um, AUR is going to continue to be important, uh, you know, expanding average unit retail and, and, you know, both as function of how we manage in the cost environment that we're operating in, but also, um, you know, covering really where the, the natural momentum of the category is, um, you know, time pieces continued to be strong uh but you know all in all i think we you know we we saw a little better balance across all the categories and and the time periods without you know some of the peaks and valleys that we saw in q4 a little more brand balance too to start the year which is good yeah i think that's a good add is there typically a good correlation between valentine's day and mother's day anything that you saw um during the valentine's day period key selling period that influences how you think about or plan for for mother's day um you know i mean they're different um i i think it's uh i think in particular while there's not a a direct correlation in performance from one to the other they're they're great periods for us to to to drive trial right and so if you're thinking about you know you're thinking about uh a gold market that's pretty dynamic and you're trying to get a sense of what's the impact of, you know, where do I pass along price? How do I balance margin and unit velocity? And I mean, that's really where we get a good read on how's a consumer going to respond whenever we get to a bigger peak. Same is true, excuse me, when you think about, you know, sort of key price point introductions. Will a customer value Vermeer over, say, a 10-karat gold program? If I want to do something different with colored gemstones and introduce a different design aesthetic, or if I'm launching a new brand, those are great windows for us to drive trial on some of those new programs, both to gauge acceptance, but also to help figure out, okay, what depth should we buy this at whenever we get to a more piece of product? you know a bigger peak uh selling window that that's probably the biggest driver anything you'd add no not that i think that's clear yeah i think that's that's probably the lion the lion share of it yeah hot topic is tariffs um obviously some changes there over the last couple weeks yeah

for you guys in particular india is an important country of origin so certainly some changes there Maybe talk about what your outlook is on that front. Talk about potential refunds, if you might build that in, if you might assume that that comes to you. A lot of moving pieces, I know.

Well, we're importer of record on a small percentage of what we buy. So refunds are a little less of a focus in the near term for us. I mean, it's largely just on direct import gold, which is less than 20% of our inventory. But what we did do is reset supplier agreements and terms in this past year to more clearly define, hey, as this environment changes, how do we manage that together? What are we sharing? What do we, you know, what do we call back or how do we pass that along either to the business or to the customer? And so I think when the rules of the road are determined and, you know, that, I mean, I haven't checked my phone, but I don't know that we know yet. Once we settle what that game plan is, then I think we know how to work it. I think, you know, for us, you know, everybody's a little bit different. And I realize, you know, I mean, this is, you know, everybody wants to build a model on it or to think about what, you know, how to, you know, how to dimensionalize it. So much of mitigation efforts in our world were about, you know, moving country of origin or thinking about supply chain flexibility to help mitigate what the impact of tariff would have been. And, you know, if I moved product from, you know, a country like India that literally went from 5% to 15% to 25% to 50% tariffs over successive weeks, you know, a move might not have made sense at 15% or at 25%, but could be brilliant at 50%. And so unwinding, I mean, our first priority is let's make sure we've got the right cost inventory to be competitive with the market and responsive to the consumer. And then let's make sure we flow it through, you know, to create value. I think that drove our decisions around mitigation. It'll drive, you know, what our responses are, whether it's about refund or how do we flex the supply chain to move back and, you know, where might things move? So a lot of moving parts right now, but I think we, you know, the good news is we've developed flexibility around sourcing and supply chain that not only enabled us to manage it without calling out a bogey or, you know, lowering our guide, which is, you know, hats off to our team and our partners in the supply chain for being able to deliver that. But it also, that same flexibility will serve us well as we figure out how to navigate this. And to your point, I think it's more good news than not, at least if the rules of the road get laid out the way we believe they're going to be right now. And the more we know that and the sooner we know that, then I think the better it positions us to be able to plan for the rest of the year and figure out how to pass that along best.

Yeah, it definitely seems like you've navigated the tariff situation well. And maybe another area that needs navigation, commodities, gold and silver prices, obviously up a bunch. How have you managed through that? What are you assuming for 2026 in terms of pricing of some of those very key inputs to you guys?

Yeah, on gold, we're assuming you're more or less where we're at today going in. And we're, as JK mentioned, still exploring what consumers will accept in terms of other product alternatives, either 8K, Vermeer, 10K, other types of gold. We'll get into guide next week. We have some gold hedges in place. Those on the P&L will hit a little more back load over Q3 and Q4. And broadly, our cost, we do weighted average cost, so it'll start to bleed into the P&L through the rest of the year.

But that gives us time also to balance the assortment with new receipts. yeah i think the the other the other thing from a certain standpoint is you know we along with a lot in the industry are really thinking about what are some of the alternative material choices that we think will come in i mean i i you know i think it's less exposure on the finished jewelry standpoint where there's stone involved because you've got more parts to play with right it's not just design and metal weight but you know the the the number of stones what other materials am i using i think you know when you look at a pure you know historic gold commodity business like chain uh the question of you know not just what price i mean historically consumers know there's a gold market you're able to pass along price i think we are entering into new territory there and so you know that is gonna i think create a little bit more exploration around alternative metals, plated, bonded, vermeil, um, you know, different gold purity weights. I mean, you know, um, I was talking to a customer, uh, a week and a half ago in a store that, that was trying to understand why gold would be that expensive. And she was explaining to me, you know, I, I, I've got this platinum ring and, and, you know, gold's higher than platinum. I'm like, well, let me show you the market. You know, I mean, it's, you know, but I do think there's a little bit of consumer education and there's also opportunities for us to think about you know design fabrication and material a little bit differently particularly i think we're particularly focused on it in that 150 and below you know when you think about gift giving so that becomes a little more important as we get to q4 but we've got the benefit of of of time to solve for that yeah totally um i guess maybe sticking with the navigation theme i've got a hundred dollar oil um if i asked you last week you know what your view was of the consumer what would you have said and now that i'm asking you today with with what we've had occur over the the past week how does that maybe change your your view of quote unquote the consumer you know i mean we've we've talked about this a little bit you know uh last year at different points of volatility short-term volatility um is is less less impactful to our consumer. I think they tend to be a little more resilient in part because it's a highly emotional purchase and it's a planned purchase. I mean, very few people are stumbling through them all and decide, okay, today is the day I'm going to buy an engagement ring. Like there's research, there's process that goes through it. And frankly, the people who stumble through and decide today's the day, they're less plus by these economic short-term conditions. And so structurally, it doesn't change our thoughts. I mean, we'll talk about outlook this next year i mean i i do think um you know over time right i mean we monitor these things because anything that that starts to reset how people plan their budgets over time can have an impact on us but but in the short term that you know a blip like where we are and when i say short term i mean even over the course of a year less impactful if you look back historically a little bit more correlation on things like interest rates and and home cost and and we're probably a little more focused there, honestly, because I think that tends to align with some of the life decisions that go into engagement and some of those other things. But even there, we've been through this cycle for a bit and we've seen stabilization there. So I think we would describe the consumer as resilient, but we also recognize there's always a breaking point.

And it's part of why we tried to be responsive in Q4 when we saw some signals in November. yeah well said i think that for us it's the broader consumer health measures rather than oil yeah understood just thinking as we think out to to 26 you know you've had a pretty big focus on the three kind of big brands uh in the portfolio they've performed generally well um you've had some underperformers is there anything that that you're thinking about in terms of i don't know um maybe cutting ties or pulling back on investment with any of the the brands or

segments that have been a little bit more of underperformers and distractions if you would i don't know if you would characterize in that way um you know as we came in to q4 um you know i i've i've successfully and successively uh punted this question to the start of the year um and and you know we'll talk a little bit more about it next week i think we've spent some time reviewing i i think you know on the whole you know safe to say that you know we are focused on those things that have been drags and and feel you know yeah you know there's still going to be outsized focus on core brands because they're so fundamentally tied to the overall health of portfolio. But that said, to remove those drags from, you know, from being a footnote, that's a negative. I mean, and you can remove them one of two ways. You can think about how do they fit in the portfolio, which may be part of what we talk about in some cases. In other cases, it's what opportunities do they represent with, you know, strategic turnaround plans and how we think they can contribute differently. And so we're focused on both. I would say, you know, to give you a little something uh you know as it relates to james allen uh which has been a a really you know a pretty visible you know part of of that drag when you look at digital brands um you know there's two parts to to that business and um one is is the site and the business that operates under that brand name but the other is the set of capabilities that feed the other parts of our business. I mean, there is a, you know, diamond marketplace that runs within that engine. There's customization that runs within that engine. And so, you know, so as we think about, you know, how do these pieces and parts fit together, we're also mindful of what are the benefits that may confer from a business like that, that show up in other parts of the P&L and how might we leverage them strategically a little bit differently to create better value overall.

Makes sense. And sounds like more to come maybe we'll get more more detail right like we'll drop the other episodes next week all right that yeah i guess along those lines in terms of cliffhanger um you know when you do give guidance and what are the things that we should be thinking about next year outside of that conversation what are the things we should be thinking about in terms of puts and takes as we look out to 26 seems like a lot of moving parts yeah i mean i think um you You know, we've talked about most of them, and I think this question of the puts and takes around tariffs and commodity costs and how we're going to manage them, I won't belabor those because we've talked about the levers that we'll pull there.

um i i do think there is you know there's clearly i think an opportunity for us to talk about you know what what what do we do to to address the first part of of q4 where we saw some softness and and what might that look like and then um and then you know i i think it's safe to say that you know the i i'm i'm extremely proud of how our team managed all of the curveballs that came in the course of this year and, and, you know, took those things that weren't in our control and then converted them to things that we could control to affect the outcome. That's great. It also takes a lot of energy and a lot of mindshare. And while I don't necessarily think the landscape is going to be, you know, any more, you know, I don't think everything's going to all of a sudden turn easy. I mean, I still think there's probably a, you know, more dynamic environment in front of us. I do think having developed that muscle and having, you know, you know, line of sight to some of it and knowing what we can anticipate, it does free up, you know, energy and resource for us to focus more on brand differentiation. I think as we came into the back half of the year, we made a conscious choice to slow some of the more accelerated brand differentiation efforts to manage risk, candidly. I mean, there's only so many moving parts you want to have at one point in time and so um as we move into this this next week and and and drop those episodes i think you know focusing a little more on how do we lean into each of these brands and really create sharper identities for each and and what are the opportunities for growth that come out of them is is a big part of where we're focused is marketing um a big a big area of focus for for 26 and we expect an acceleration yeah i would say you know if you're looking for for headings of of you know What domains will we be talking about, whether they're next week or venturing into successive quarters? Marketing is part of it. Customer experience is part of it, for sure.

I'd add on the puts and takes going into next year. So this year, we'll have some deleverage on SG&A. It's almost entirely from incentive comp, both at the corporate and store level. We're not quite at 100%, but reasonably close. We're next year. That's going in pretty clean. So we expect, inclusive of advertising, we'd expect to be able to leverage SG&A on a low single-digit comp.

Yeah, I do think it is probably a little cleaner set of compares overall. And there's probably fewer moving parts, which will allow us to actually focus on the core drivers of our business a little bit more.

Yeah, terrorists will work their way through in the first couple of quarters because the Liberation Day was in the back half of last year. But otherwise, it's pretty clean.

I mean, based on your performance in holiday of 24, it was the issue, I guess, was those 10 days leading up to Christmas. Seems like you've corrected that this year and had some good performance. You mentioned your performance in November, this holiday period. So was that something more than just external factors that were going against you? And is that sort of the key learning from this holiday that you can improve on in 26? I mean, it was largely macro.

But what I would also say is, you know, I think if you knew then what you know now, there's always choices you can make in the macro to leverage it. And I think the learning or really the area of increased focus for us is that recognition that, you know, A, there's two businesses, fine jewelry business and gift-giving business. But when you break down gift giving gift giving business, it's a little bit it's a little bit like, you know, like like a hockey game. Right. I mean, you got you got kind of three periods within that quarter. There is an early selling period that, you know, the drivers, the promotions are less broad. They're more focused on key items there. It's just a different consumer that shops during that earlier window. and and the leverage points are you know to serve them are different as you get closer broad probably works in our favor because you can leverage the the breadth of inventory that you have and still offer a value proposition but it allows you to pick what what works best for you particularly as you get a little more last minute and then post holiday there's which is actually something our team's been pretty good at it you know for the last couple of years is leveraging that you know sort of gift card cash let me treat myself i mean that that has been a source of strength for the last last couple of years we don't want to give that ground up i think

we've you know we've we've focused well there but i i think the breakdown of each three of of those parts of the season represent an opportunity for us to attack it a little bit differently and and you know if we're doing our jobs right then i think it adds up to some opportunity sounds good yeah 500 million dollars free cash flow is that number correct uh pretty big pretty big number um maybe talk capital priorities at this stage um talk about share repo is there anything you could say about what happened this this quarter so we'll i think we'll provide that next week but our we will finish the year above our total liquidity threshold so we'll have excess cash available for return that's from a priority standpoint we've we've said the top top priority

is organic investment i'd say you know there's probably a little more opportunity to invest deeper in our stores particularly in the k sales and jared so in the core focus areas um and then you know invest in the balance sheet we don't have any debt balance sheets overall very clean so there's not a lot of cleanup that's needed there and then it would be returns to shareholders we haven't called out m&a as a as a major priority got it um and last year i think you know you talked a bit about some real estate actions um maybe just talk about how you're thinking about this this upcoming year what what should we expect on that front not not different i mean i i think uh healthy fleet overall um you know we as part of of the grow brand love reset we we highlighted

up to 200 stores that we felt like were opportunities to you know to to maybe prune uh, the fleet, um, disproportionately, I mean, you know, while it, while it may sound like a lot relative to square footage, much lower percentage when you look at revenue, because it's disproportionately weighted to some of the kiosks where we had multiple locations, same mall, et cetera. Um, and, and no real change to that. Um, actually if anything, you know, a little more focused on where might, you know, we recognize, uh, we've got some investment opportunities in stores that, that tie to customer experience so as we talk about strategic priorities we'll get into that a little bit more we obviously a lot of test and learn but uh you know relatively high threshold on return and we're exceeding that and so we want to want to think about how we accelerate that as an opportunity to create more growth we also called out a reposition strategy last year which which will continue through through next year it's as jk mentioned the fleet and those locations right now are pretty healthy it's more getting out in front of where we see venues that'll decline over the next two to four years and getting out in front of that.

You mentioned, Jackson, earlier that you would expect to achieve SG&A leverage on a low single-digit positive comp. Is that the right framework that we should be thinking about? Once you get rid of the incentive comp noise, yeah.

Yeah, actually, we're probably better. I mean, the team's done a great job every year of strengthening that position, but I actually think we're better positioned to do that coming into this year than even before.

And then what does the gross margin look like in that same sort of low single-digit comp scenario if we think about it in terms of an algorithm?

I don't think we're quite ready to put the margin construct out, but I'd say we feel good about where we sit today on overall expansion from last year. I think there will be a little bit of lumpiness with some of the quarters with tariff and gold wrapping a little more at the first half of the year. As I mentioned before, we've got gold hedges in the back half that should help offset some of that. So I think it'll balance, but maybe a little bit up and down over the course.

Yeah, I think that's right. I mean, we're obviously not giving guide yet, but I would say no change in our thought process around where the opportunities are with margin. And if anything, timing may be a little bit different as we navigate some of the environment. But generally, I think you'll see some consistency and approach there.

Got it. Can you talk about maybe just what you're seeing on the natural side versus the lab grown in terms of costs on the cost side for one, but also, you know, at retail, what's sort of been happening? Sure.

You know, it's interesting. I probably got asked this question more in the last year, you know, particularly at the start of the year.

I saved it to the end.

Well, no, and it's inappropriately, right? It's tailing off. I mean, it was the first one. And now it's like, okay, I think things have stabilized, but can you validate for me? And I would say that's, stable is probably the best word. I mean, it's, you know, we even sort of reluctantly, I mean, we don't really lead with penetration numbers or any of those things, because I think what we would tell you is it's, you know, they both are a part of our mix, right? And even with, you know, often in the same customer's jewelry box. And so the fact that there is a clear role for each, and frankly, we want both to grow is where we're focused. You know, penetration will still grow for lab grown on the fashion side in large part because it's very underpenetrated and it's not a replacement. It's not either or. I mean, this is a category extender that still holds true. And, you know, no change to that. I think on the cost side, the, you know, lab has largely stabilized. I think the, you know, the cost and profit margin side are tight enough now that there's just not as much volatility on the supplier side. And to the degree that there's any sort of give there one way or the other, it probably doesn't make it through to retail construct because we're low enough now that I think there's good stability there. We're still seeing average unit retail expansion as people trade up. We're still seeing margins hold. So no fundamental change to what that model looks like. And then on the natural side, we've actually seen a little bit of strength. I would also say, you know, if I'm completely honest, you know, it's buoyed by the high side, right? And so I think where the growth opportunity there is on AUR, higher quality natural diamonds. And as we look at our assortment, we see the opportunity to pull natural up and create, you know, interest there. We actually believe there's consumer demand for it. We see it. And, you know, we see even some evidence of that in independence. So, you know, feel feel good. And, you know, to the degree that there's sort of this bear versus bull argument there. I mean, the bear case is is really not in play. And I think it just becomes, you know, at some point it's it's almost like gold and silver. Right. I mean, it's just part of our mix. And it's, you know, how do we plan and solve for that to meet customer demand?

Because there's growth opportunity for both. it's great we are we're at time so jk jackson thank you for for being with us and i appreciate everybody listening in yeah thank you guys appreciate it thanks guys