Good morning and welcome to the Signet Jewelers' second quarter fiscal 2026 earnings call. Please note this event is being recorded. Joining us on the call today are Rob Ballew, Senior Vice President of Investor Relations and Capital Markets, J.K. Symancyk, Chief Executive Officer, and Joan Hilson, Chief Operating Officer and Financial Officer. At this, I would like to turn the conference over to Rob. Please go ahead. Good morning. Welcome to Signet Jewelers' Second Quarter Fiscal 2026 Earnings Conference Call. During today's discussion, we will make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties. Actual results may differ materially. We urge you to read the risk factors, cautionary language, and other disclosures in our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Except as required by law, we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events. During the call, we will discuss certain non-GAAP financial measures. For further discussion of the non-GAAP financial measures, as well as the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures, investors should review the news release we posted on our website at ir.signetjewelers.com. With that, I'll turn the call over to J.K. Thanks, Rob, and good morning, everyone. Before I get into prepared remarks, I'd like to quickly thank our team. Our outperformance again this quarter is a reflection of your commitment to the customer as we continue in the early stages of our Grow Brand Love strategy. Thank you for your hard work in driving consistent performance this year, and let's continue the momentum into the holiday season. There are three key takeaways I'd like to leave you with today. First, we delivered another quarter of positive same-store sales and earnings ahead of our expectations, and including August, we've delivered eight consecutive months of positive comps. Second, we continue to make early progress on our Grow Brand Love strategy through distinct merchandise, enhanced marketing, and unique experiences, as well as attracting key leaders to advance our growth agenda. Third, we are fully prepared and well positioned for holiday as we enter our most critical season with momentum and clear strategic focus. Turning to the quarter, we delivered same-store sales of 2% ahead of our expectations, driven by our early prioritization of the three largest brands: Kay, Zales, and Jared, which delivered a combined same-store sales growth of approximately 5% in back-to-back quarters. At the category level, our early efforts to focus on fashion drove a 2% comp growth. Additionally, services continues to deliver, posting a high single-digit comp growth this quarter. Fashion is important to us both due to the size of the category as well as building customer relevance across categories. We are focused on delivering fashion pieces across key price points to reach more customers, including an expanded assortment of lab-grown diamond or LGD fashion pieces. LGD fashion accelerated versus the prior quarter, growing to approximately 14% penetration of fashion sales. This continued momentum on strategic imperatives bolsters our confidence for the holiday season this year, which I'll touch more on shortly. Before that, I'd like to update our progress on Grow Brand Love go-to-market strategy via three key levers: merchandise, marketing, and customer experience. Within merchandise, we've developed distinct assortments that include new collections. At Jared, our assortment work is furthest along in its differentiation, highlighted by collections like Unspoken and Shy Creation. We are expanding our Unspoken line ahead of holiday based on strong customer response to the initial assortment. This collection reflects the rarity and uniqueness of natural diamond pieces at a wide range of price points. Shy Creation, another collection we're expanding this holiday, elevates the trend of layering or stacking multiple pieces to create a bigger and more styled look. At Kay, our sentimental gifting brand, we're introducing more milestone gifting pieces at key price points, as well as items at a price that are designed to serve value-oriented customers without relying on promotions. At Zales, we're focused on breadth and depth of self-purchase fashion. Our assortment offers a range of price points intended to target jewelry box essentials, as well as fueling the stacking trend. Turning to marketing, our go-to-market strategy is now focused on maximizing performance across a more full-funnel approach. Building off the momentum we delivered in the first quarter, our three largest brands drove a more than 40% increase in impressions on a mid-single-digit increase in media spend in the second quarter. We're also adjusting where we spend, with a more than 20% increase in social media channel buys to last year, with social media now representing more than a quarter of our total marketing spend. We are bringing brand messaging to more relevant channels that deliver the best reach. We also continue to refine the messaging within each brand. For example, we launched our Love Highway campaign in Jared this quarter. Moving away from the longstanding "he went to Jared" mentality, Love Highway is a campaign that targets affluent couples navigating life's roads together. This campaign represents a new way for Jared to go to market, utilizing a popular social media influencer, Taylor Hill, in this example, to drive traffic and awareness. Highlighting the early effectiveness of this type of campaign, social media impressions for Jared this quarter were nearly double what they were last year. At Kay, we're early into modernizing the brand. Leading these efforts will be our new Kay and Peoples Brand President, Julie Yocum. Julie comes most recently from Helzberg Diamonds, where she was the President and Chief Brand Merchant Officer and previously was the Chief Merchandising Officer at Blue Nile. Her deep experience in the jewelry industry, both as a merchant and a brand leader, will be important to refresh Kay to a more modern experience to attract the next generation of customers and increase repeat purchases from existing customers. As part of our modernization efforts, Kay's primary marketing objective is to drive emotional connection with customers, including connection with an expanded audience, allowing the brand to reduce reliance on promotion over time. One recent example is naming Teddy Swims as Chief Love Officer. Appealing to a broader audience, the campaign has already driven more than 2 billion impressions since launch. While these are examples of early progress in marketing, I'm excited to welcome Lisa Leitch as our new Chief Marketing Officer. Lisa previously oversaw digital and brand marketing for the Crocs footwear brands. She brings over two decades of experience in transforming and building brands. Further, she has a strong track record of digital and social marketing excellence. Lisa will lead our team to drive brand relevance through strategic partnerships and activate channel strategies to build loyalty with existing customers while attracting new ones to engage with our brands. She will also collaborate with the brand teams to develop creative content and storytelling to drive consideration while delivering the benefits of scale in marketing. The customer experience is the third lever of our go-to-market strategy and the one that will take more time to fully achieve. Our goal is to create unique experiences at each of our brands that enhance the overall omnichannel model, integrating the brand experience from digital to physical down to remerchandising the cases. Our recent reorganization has placed store operations, including the store experience, directly under our brand leaders, giving them both the opportunity and the responsibility to create unique customer experiences over time. We're early into this process, but some recent examples of the type of changes we'll be testing and potentially implementing include store formats designed to drive self-purchase and milestone gifting, more self-directed browsing, and more interactive experiences. We're furthest along in this process at Jared, where we've been enhancing the shopping and checkout experience. In stores, our presentation is aligned to recent campaigns, integrating marketing alongside the collections. This delivers styling suggestions to customers and provides them clearer illustrations of how pieces can complement their personal jewelry collection. Further, Jared has completely upgraded their packaging, which is often the first impression among important moments for our customers. This is a reflection of the end-to-end upgrade of brand touchpoints that are reinforcing Jared's elevated position of inspired luxury within our portfolio. Consumers are responding to this change in the shopping experience, as reflected by the fact that Jared had the best year-on-year improvement to in-store sales conversion across our portfolio this quarter. Before handing things over to Joan, I'd like to detail our thoughts around navigating the back half of the year. We believe we are well positioned to enter the holiday season with the right merchandise assortment at the right price points and the right marketing campaigns, all this to bridge the gap in holiday results last year. We believe the consumer will still seek to celebrate this holiday season and will leverage our marketing and brand experience to amplify that emotion at the right time. Within fashion, we are significantly bolstering our LGD, Mens, and other trending category assortments in the key gifting price points of $200 - $500, as well as higher penetration in LGD fashion across all price points. For example, we expect the number of LGD fashion pieces on hand at price points below $1,000 to be up at least threefold from last year, with even higher growth below $500. We see our customer willing to spend as long as the assortment is compelling and delivers on their expectations of value. We believe our assortment is well positioned to deliver against that backdrop. We are navigating a dynamic tariff environment to deliver for our customers and our shareholders. We are working with our vendors to land the inventory at the best time to minimize tariffs and maximize holiday availability. We're also working to reduce the impact of tariffs through discussions with suppliers to maximize domestic production, optimize country of origin, and by value engineering pieces that deliver on customer expectations at the right price points. Finally, the team is actively evaluating ways to optimize our production as we begin to place orders into the coming year. In summary today, my key takeaways are: first, we once again delivered positive same-store sales and earnings ahead of our expectations, with eight consecutive months of positive same-store sales through August. Second, we continue to make early progress on our Grow Brand Love strategy through distinct merchandise, enhanced marketing, and unique experiences. Third, we're confident in our ability to navigate the second half as we prepare for our most important season. With that, I'd like to turn it over to Joan. Thanks, J.K., and good morning, everyone. Revenue for the quarter was over $1.5 billion, with comp growth of 2%, led by growth in fashion and services. Fashion delivered a 2% comp growth, driven by continued acceleration of LGD product performance, particularly at key gifting price points. Bridal comps were roughly flat, with our three largest brands delivering mid-single-digit revenue growth, led by AUR expansion on relatively flat units. Services grew over 7% in the quarter, led by higher attachment rates of extended service agreements. July was our best month of the quarter, despite the toughest comparable within the quarter, and was flat on a two-year stack. Merchandise AUR increased roughly 9%, with fashion up more than 12% and bridal up 4%. This is a consistent result benefiting from our bridal assortment strategy, which has generated AUR growth for the third consecutive quarter. We've seen price stabilization in both loose LGD and natural over the last six months, with natural even rebounding across carat sizes. The fashion AUR improvement reflects the strength of our LGD fashion assortment, which carries a more than 3x AUR premium to other fashion pieces, as well as higher gold prices. With respect to units, we saw a decline of 7%, largely in banter, which has been more impacted by gold prices and brand-specific assortment strategy to move away from some low-price promotional items. Now, moving on to gross margin, we delivered a rate expansion of 60 basis points to last year, which included gross merchandise margin expansion of 30 basis points. This reflects continued progress of our refined promotional and assortment architecture strategies, which added approximately 80 basis points of expansion. Growth in services also added roughly 20 basis points of expansion. The expansion in merchandise margin rate was partially offset by a 70 basis point negative impact from an increase in wholesaling of loose stones and the write-down of some discontinued product based on a comprehensive assessment of items below cost. As a reminder, wholesaling of loose stones carries a lower margin but is important to our inventory churn and newness capacity. We also saw 30 basis points of gross margin leverage on fixed costs from a 2% comp. Our SG&A rate improved 50 basis points to last year, driven by reorganization cost savings and disciplined expense management. We do not expect SG&A leverage to extend to the back half of the year due to the reset of incentive comp, which is overweighted to the back half of the year, particularly in the fourth quarter. Adjusted operating income grew more than 20% to $85 million for the quarter, driven by positive same-store sales, gross margin expansion, and leverage in SG&A. Adjusted EPS was $1.61 billion, which was 29% above last year on higher income and a lower share count, partially offset by a higher effective tax rate. Turning to the balance sheet, inventory ended the quarter at $2 billion, nearly flat to last year despite a more than 30% increase in gold costs. Cash ended the quarter at $281 million, with total liquidity of more than $1.4 billion. Free cash flow for the quarter of more than $60 million improved by nearly $50 million over the prior year and improved by more than $15 million year to date. We repurchased approximately $32 million of shares in the quarter, or nearly half a million shares, bringing our year-to-date repurchases to roughly $150 million, or 6% of shares outstanding. Our remaining repurchase authorization is approximately $570 million. Recall that our approach to capital allocation includes prioritizing investment in organic growth, maintaining a conservative balance sheet, and returning capital to shareholders through share repurchases and dividends. To this end, our organic investments remain on track this year to a range of $145 million- $160 million in capital investments and is more heavily weighted to our real estate strategy. Before moving on, I'd like to provide an update on our digital brands. We continue to remain positive with the progress we're seeing in Blue Nile. While the second quarter includes the temporary impact from shifting to a U.S.-based marketing team, as well as pricing resets that required promotional cooldowns, the brand returned to positive comps in July and delivered a 25% increase in fashion revenue in the second quarter. We believe Blue Nile will further benefit from a more differentiated product assortment and further price point distinction. We continue to evaluate the positioning of James Allen within our portfolio. The brand's performance this quarter impacted total company comps by 120 basis points, a modest improvement from the first quarter. Based on testing to date, we believe the James Allen customer will respond well to faster ship options and more finished jewelry offerings in fashion basics. We expect James Allen's impact to same-store sales for the balance of the year to moderate to a range of 60 basis points- 90 basis points. Turning to guidance, we expect total sales for the third quarter in the range of $1.34 billion- $1.38 billion, with same-store sales in the range of down 1.25% to up 1.25%. We expect gross margin rate to be up modestly in the quarter on continued merchandise margin expansion. We also expect some deleverage in SG&A in the quarter, including incentive comp reset, change management costs related to our reorganization, and shifting some marketing spend out of Q4 and back into Q3. Recall last year, we shifted some marketing out of Q3 until after the election in battleground states to avoid paying premium rates. We expect adjusted operating income between $3 million and $17 million in the quarter. For the year, we are raising our guidance range, reflecting results in the first half of the year, our third quarter expectations, and the current tariff landscape. We now expect total sales in the range of approximately $6.67 billion- $6.82 billion, with same-store sales in the range of down 0.75% to an increase of 1.75%. The lower half of our sales guide continues to provide flexibility in the fourth quarter for a measured consumer environment. The implied two-year stack in the second half of the year is in line or slightly more conservative at the high end of guide than what we have seen over the last two months. We are raising our adjusted operating income expectation to a range of $445 million - $515 million. We continue to expect gross merchandise margin expansion for the year, inclusive of the impact of tariff. With regards to tariffs, India currently represents roughly half of our finished merchandise purchases and has seen the tariff increase from 10% - 50% in the last five weeks, inclusive of the incremental 25% Russian trade penalty. To minimize the penalty, we will leverage existing inventories, shift some production to other countries, evaluate pricing and promotions, as well as utilize bonded warehouses. If the penalty were to remain in effect for the balance of the year, we expect adjusted operating income in the middle to lower end of the range. Conversely, if the tariff penalty is removed in the next two months, we expect adjusted operating income in the upper half of the range. Also working to offset higher tariffs, we're in the early stages of rolling out our refined promotional strategy to other brands, reflecting the success we've seen to date at Jared. We expect SG&A as a percentage of sales to be flat or slightly higher year over year at the high end of our guidance range. Recall that our outlook also includes an incentive compensation reset within SG&A. We are raising our adjusted EPS guide today by approximately 3% at the midpoint to a range of $8.04 - $9.57 per diluted share, inclusive of share repurchase to date. Before we turn to Q&A, I'd like to thank the team for the agility in navigating the impact of tariffs, all while embracing the strategic changes within our organization and delivering a consistent positive performance for our business. Operator, let's now go to questions. Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear promptly that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speaker phone, please lift the handset before pressing any keys. Your first question comes from Paul Lejuez with Citibank. Your line is now open. Hey, thanks, guys. Adam, can you talk about the driver of AUR in both bridal and fashion in terms of how much is being driven by a mix versus pricing actions? How do you expect that to change, if at all, in the second half? Yeah, Paul, good morning. Thanks for being on the call. There's a couple of things going on. I'd say mix is largely the driver of it. We'll focus on fashion first. I think there's two dynamics there. When you look at the introduction of lab-grown diamonds into the mix, that really does expand the AUR. It's an expansion of the category overall. It's not even really trade-off. It's about stretching what the category of fashion looks like for us. With that, we see continued expansion in AUR and have modeled it accordingly. From a bridal perspective, similar. Mix is really driving it, whether that be on the lab side or the natural side. Candidly, we've seen some stabilization in lab and natural markets of late, which I think bolsters what the bottom side has been. That action that we've talked about, I think on previous calls of how customers are really looking for opportunities to trade up, continues to be something that we see playing out. Got it. On the tariffs, specifically India, as you think about the impact on this year versus next year, how are you thinking about the potential wrap-around into the first half of 2026? Would you expect to be able to mitigate the pressures if they stayed at this 50% rate? I'm just trying to understand how much is benefiting from using existing inventory versus does this just create an issue for you next year? I think we've not given any guidance for next year, obviously. As we look at it, it's the same set of tools that we have. I think the benefit of thinking about next year is you've got a little bit more runtime to be able to mitigate, particularly as you start thinking about some of the design elements at play and any of the country of origin movements that are part of our strategy, including even some onshoring of production to the U.S. Obviously, there's a lot of moving parts in the tariff landscape right now. I'm really proud of what our team has done. We've been able to maintain guide throughout the year. Even with this incremental 25% penalty, to stay within guide and also be able to pull some levers that ultimately are going to create value for our customers and for shareholders by hitting the right price points as we go into the holiday. We expect to be able to continue to do that. Valentine's is really right around the corner. As we're looking at holiday merchandise, we really sort of lump the two together. Beyond that, what I would tell you is we're going to continue to exercise the same set of tools. I think this is a race where the finish line has moved around quite a bit. It's a set of muscles that we have because we've operated in a commodity-based environment that's had a lot of moving parts before. We've got great partnerships with our suppliers and really leading supply chain capabilities within the industry and the balance sheet to be able to manage it. I think we're as well positioned as we can be. We're also doing our best to even exercise some tactics to be able to create the flexibility if things continue to be dynamic. Got it. Thank you. Good luck. Yeah, I appreciate it. Thanks for the question. Your next question comes from Lorraine Hutchinson with Bank of America. Your line is now open. Thank you. Good morning. Can you give us an update on the bridal business? What are plans to try to get the unit velocity moving again, and anything specific planned for marketing into the holiday season for bridal? Yeah. We're really pleased, Lorraine, with how bridal has been performing within our three largest brands and really working through the impact that James Allen is having on the bridal business. Overall, if we just focus on the three largest, we're seeing AUR be a strength, particularly over the last three quarters. It's remained relatively consistent. The unit growth, we see the opportunity to continue to trade up into higher carat weights. J.K. mentioned we saw stabilization in retail pricing, and we've seen an increase in natural, particularly in some of the core larger carat weights. We think that is a positive for us from an AUR perspective. From a unit perspective, we've really fortified some of the lower price points within our assortment and continuing to drive that. Kay's sales in Jared is a critical focus. If you kind of look at that sweet spot between $2,000 and $5,000, we see opportunity, particularly as we see the stabilization and even the increase on natural diamond pricing. We believe that the trend of bridal, we are on pace currently with what we're seeing in the market and in the largest brands, even slightly ahead. Positive signs for us as we lean into the critical fourth quarter for bridal. Thank you. One of the items you mentioned on your list of mitigating factors was testing pricing. Just curious if you have any tests complete and what the customer reaction has been to price increases in either fashion or bridal. Yeah, you know, it's been a really company-wide effort across our largest brands. We're rolling it out as we move to the back half of the year. Jared, as we've mentioned, saw a reduction of discounting, 20% - 30% over the first half of the year. With that under our belt, we've been able to apply that to Kay and Zales. The three brands are posting up a mid-single-digit comp. Seeing that, the customer response to those changes has been good. What I'd like to share, though, is that it's not so much just retail price change per se. It's really lower discounting, but also fewer promotion days and on promotion just going less deep, if you will. We're seeing that we weren't getting paid for some of the pricing actions that we had in the past. We've removed some of the days and leaned out some of the price, the discounts, and it was a good result. We did mention, Lorraine, that during the quarter, we had pricing and promotion cooldown so we can reset price. We do expect some of that as we roll out to the other brands to occur in the back half of the year. Really, we'll take action in other areas of the business to mitigate some of the impact of that cooldown. It's really been a strong effort across the brands and one that is embraced and frankly has served us well timing-wise for the impact of the tariff decisions that have impacted our business. Yeah, I think that's spot on. The only thing I would add to it to maybe help dimensionalize it a little more is we've had pretty significant reset in assortments, particularly in a fashion category. With that level of newness, we really have had the opportunity to focus on design and where we're buying, who we're buying from, leveraging those partnerships to be able to marry design with the sourcing capability to maintain key price points for our customers. I think what we're finding is they understand the commodity market. They certainly understand when gold prices move and they see value associated with that. The ability to really adjust our assortment architecture overall and supplement with newness means we're landing new merchandise at the right price points and have been able to do that with the tariff landscape in mind so that we're well positioned going into the holiday. Yeah, I think the only thing I'd add to that, J.K., is that it's been selective for existing SKUs. It's been a selective price increase, and it's been somewhat modest mid-single digit on applicable SKUs. It's something that we've really been able to manage strategically with our promotional cadence and the depth of discounting as well. I think all in all, it was a cohesive strategy around pricing and promotion for the business. Thank you. Your next question comes from Randi Abada with Jefferies. Your line is now open. Yeah, thanks a lot. Good morning, everybody. I guess, J.K., when you look at the fashion AUR, obviously nice improvement there, is there any kind of feel for what the headroom looks like in that category? Because you're talking about a significant amount of increase in the number of LGD fashion pieces to drive up, you know, drive up obviously purchase activity demand and could also drive up AUR. Just any kind of feel to dimensionalize where's AUR now in fashion and what the headroom could be would be super helpful. Thanks. Yeah, I think it's a great question, Randi. I think there's still runway there. We do want to be mindful that we're thinking about how to drive some unit growth along the way. Although today, a lot of our unit performance is tied to gold, and that tends to fluctuate as gold prices fluctuate. As we look at lab-grown, or LGD fashion, proliferation, it is generally a much higher price point than what our existing assortment was. We are setting at, I think the number is about 14% penetration overall. That would tell you that there's still quite a bit of room there for us to continue to grow and expand the category. I think how that plays out in terms of AUR itself is also a function of what we're doing to grow some of our base categories like gold. At the end of the day, I think we still see runway there and feel like there's an opportunity for us to continue to grow market share in fashion, particularly as we expand into that side of the category. Yeah, the only thing I'd add there is that the fashion penetration that J.K. stated is double what it was last year at this time. Yeah. To your point, Randi, there and J.K.'s continued growth, the other add-on would be that we don't expect a pullback in AUR at this time, citing the higher gold prices, this LGD penetration growth, our lower level of promotions, and the tariffs. We expect AUR to continue. Great. When you look at the success and improved momentum of Jared, Zales, and Kay, you gave us some crumbs that were very important around the other banners that are getting, I guess, less worse, right? Blue Nile turned, came down on impact. It looks like it's going to be less worse going forward. I think banter hurt the units as well. Are we looking at perhaps, let's say, two quarters out, three quarters out before we kind of, we can lap a lot of this non-Kay, Zales, Jared items of these other banners and start to kind of, they'll start to kind of become more neutral impact to both AUR units and comp? How do you see that? That would be really helpful just to dimensionalize that. Joan, just on the CapEx cycle, I believe you reiterated the CapEx guidance for the year. High level, is that a kind of, is that like a normalized type of number as we just think about the future without giving guidance? Just kind of just trying to get a sense of where we are in the CapEx cycle just for go-forward free cash flow purposes. Thanks. You want to say CapEx first, and I'll go back to it? Sure. The $145 million- $160 million, Randi, is, as I said, heavily weighted to real estate. I think as we look forward into our real estate strategy and we continue on the grow brand love from banners to brands, our real estate strategy and in-store experience will continue to follow that strategy. As a run rate, we really haven't assessed what that brand strategy would mean to our CapEx guidance into the following year. I wouldn't expect it to be markedly different at this time. As you know, our capital allocation priority is to organically invest, number one, in our business. It will follow the strategy, but I wouldn't see it as being materially different than where we are today. Thank you. Let me take the first part of your question, Randi. As far as the other brands are concerned, yeah, I mean, we're focused on what we do to drive improvement there. I would say we've been very clear about the focus on Kay, Zales, and Jared, given the size. It's hard to be healthy if the core is not healthy. I'm really pleased with the way that we've put the energy there. I think it's absolutely the right thing to build momentum in the business. It also, to Joan's point, whether it's how we think about promo or what we're looking at in terms of assortment, informs the decisions that we feel are critical to help drive the other brands. Within each, there's a little bit different story. Blue Nile continues to build momentum. I think that is very much about distinguishing its brand positioning and really moving back up a bit to where it has held the greatest strength. It also has an opportunity as it relates to fashion, very similar to Kay, Zales, Jared. That similarity is part of why it's moving faster, along with, within that team, the focus on it as really the bellwether of the digital brands. James Allen, we've got some work to do strategically. We have some work around price and promotion positioning within the marketplace. We also have some work around speed to market relative to customization or the assembly customization that's really the hallmark of what James Allen does. The team is working hard to reposition and relaunch with those improvements in place. I think we'll then be able to measure what it takes to win that business back from a customer standpoint and/or what are the right decisions that we should be making moving forward with James Allen. The other businesses we don't talk a lot about. Peoples has been a really strong business in Canada. We don't talk about it quite as much. I probably owe a big thanks to our Peoples team in Canada. They're small but mighty. If you look at their business on a two-year stack basis, it's probably the healthiest in the company, growing share and really leading well. UK, we don't talk a lot about for some of the same reasons. It's been relatively healthy. I think there are some market share dynamics that are unique to the UK market that present some opportunities for us moving forward. It's not a big source of investment or a big source of capital, so it's probably not going to be something that we dimensionalize a lot. I think Diamonds Direct is a really good business that, like a lot of businesses that are sort of founder-led, hit a growth stage where you really have to look at operating model and what it means to go from being a smaller regional founder-led business to something that is of larger scale. That's work that's in front of us. The team is galvanized around that. I do think that as we tackle that, to your point, those things, I wouldn't use the word less worse. Our goal is to improve them and create some tailwind behind those businesses and make them stronger parts of the portfolio. It's going to come with the gravitational pull and the weight of having core brands like Kay, Zales, and Jared that really do drive performance for us. The only one I didn't mention is Banter. I think Banter is a good business. It's got some, it's very different from the rest of our businesses, just given lower price point, heavy reliance on gold, kiosk business. There are some unique dynamics there. It's actually sort of holding its own. Not a high source of capital or investment moving forward, but something that we'll continue to manage as well. Thanks for the question. Very helpful. Thank you. Your next question comes from Ike Boruchow with Wells Fargo. Your line is now open. Hey, this is Robert on for Ike. I was wondering if you could talk a little bit more about your 3Q guide, because it seems like it's a little below the 2Q run rate. Has something softened? Are you seeing some earlier demand pull forward? Could you talk a little bit about your holiday comp plan? Thank you. I'll take the 3Q guide. The guide, the performance that we saw in second quarter, we saw momentum continue into the third quarter. We're pleased with that. The momentum was on a positive two-year, with a positive two-year stack. The guide itself is just relatively measured. We feel that we're pleased with how the business performed. The guide itself just takes into account the many factors that we face in the third quarter. Happy with the top line momentum. We'll see a little bit of what we continue to see, gross margin expansion with some deleverage in SG&A. Really relative to some incentive cost reset. We are, and that's the underpinning of the 3Q guide. I think as we look at the full year, we've raised our full-year guidance, same-store sales, with an increase in operating income, less so on the low end, given the impact of tariffs and so forth, which we've discussed. The same-store sales itself is a slight decline, if you will, in the applied guide for 4Q. It's really all around the idea of this measured consumer environment and being somewhat conservative to what we've seen happen in the business, just knowing the backdrop of the business. Overall, we've raised our guide reflecting what we've seen in the second quarter, our expectations for third quarter, and then just remaining somewhat measured in the fourth quarter for holiday. Yeah, I think. Oh, sorry. Go ahead, Rob. I didn't mean to cut you off. Oh, no, go ahead. What were you going to say? No, I was just going to say, as far as holiday comp plan, I, you know, we believe we're well positioned to, you know, maximize the holiday season. I think Joan touched on it. There's a lot of moving parts in the environment right now. We've seen our customer be resilient. We largely set in what is a planned and emotional purchase. Those drivers are fairly timeless, resilient, and we're seeing customers respond to that in the marketplace. I think we've also taken the right steps, given maybe where we didn't deliver as strongly last year. Our better position within key price points. We called it out in the script, but LGD fashion is 3X the inventory level or ownership levels below $1,000 and even greater below $500. We've put a particular focus on that $250 - $500 price point because that's really critical, especially as you get into those last 10 days. I think we're very well positioned to be able to maximize that. It's not just the ownership level, but when you look at the level of newness, that allocation of inventory is much more on trend and better positioned relative to what I think customers are looking for. We'll be there ready for them because I think they'll still shop for the holiday. The only other thing I'd add to it is, from a marketing perspective, very focused on maximizing that investment in full-funnel marketing across the year to really pulse demand during those last key time periods. We'll continue to build upon the impression expansion that we've seen over the course of the year to best position ourselves to maximize the holiday season. Great. Thanks. One other follow-up on that. Can you talk about how your lab business did in the second quarter, and, you know, how comps and margins are doing in it? The lab-grown diamond business, yeah. What we've said about fashion, Robert, is that it has a 14% penetration rate in fashion and has doubled what it was last year. Margins are quite nice. They're up somewhat with respect to the lab-grown fashion performance. Frankly, we're seeing, as we said in bridal, we're seeing the stabilization of pricing in lab-grown and, conversely, on natural, it's actually up. We're seeing a nice AUR movement in both of those businesses. The penetration to an earlier point is we see runway for that to continue to grow in fashion. Great. Thank you. I'll pass it along. Thank you. Your next question comes from Mauricio Serna with UBS. Your line is now open. Great. Thank you for taking my questions. I'd like to maybe ask if you could elaborate on your third quarter performance, quarter to date. How does that look versus what you were seeing at the end of July, which you pointed to as your strongest month? Please help us to also think about the compares for the third quarter. I think I recall last year August was actually the strongest month of the quarter, if I'm correct. Just trying to understand what that implies for the sales guidance for Q3. Thank you. Yeah, for Q3, we exited the quarter nicely, as we mentioned. July was our toughest comp, and we exited it nicely on a positive comp, highest comp in the month, in the quarter, in the second quarter. The comp has been fairly consistent across the last several months. As we look into August, we like what we're seeing, and it's a positive comp trend for us. The only caveat I'd share with you is that we'll have some further pricing resets and cooldowns that we'll experience in the third quarter as we prepare for the critical fourth quarter. Overall, top line trends have held and believe that the team has done a nice job in setting architecture as we land new product throughout the quarter. Got it. Just one quick follow-up on the guidance for the updated guidance for the year. Could you give us a sense of how much pressure from tariffs you're expecting in Q4 when you're thinking about the high end and the low end of the guide? Yeah. Mauricio, as we think about the guidance range for operating income, what we've said is if the Russian penalty remains on the Indian imports, we expect to be in the middle to lower end of our EBIT range. If it's removed, we would expect to be in the upper half of the guidance range. That's the dimension that we've put within our range. We were able to evaluate, to the discussion earlier, opportunities to offset as much of the tariff and mitigate as much of the tariff as we key on with country voyage, pricing, promotion, and so forth. I believe that the teams have the right pricing in place for holiday, which is why we were able to stay within that guidance range. Just one point of clarification for the high end of the guide, when you say they remove like the Russian penalty, does this mean the tariff is 25% or 10% on? Yes, exactly. That the reciprocal tariffs remain intact, but the penalty, if that is removed, we would expect to be in the higher end of the range. What would be the tariff? 25%? Yes, for India. With the Russian penalty, it's 50%. We would expect to be in the upper half of the range if that penalty would be removed. Understood. Thank you so much. Your next question comes from Dana Telsey with Telsey Group. Your line is now open. Hi, good morning, everyone, and nice to see the progress. As you think about the learnings from the fourth quarter applied to this year, I remember last year some of it was not having enough of the right inventory at the price points of $200 - $500. Obviously, a growth in lab-grown diamond fashion. How do you think of the playbook for holiday this year? What is marketing spend going to look like this year versus last year? Thank you. Sure. Good morning, Dana. Thanks for the question. We feel good about the holiday. We've kept our eye on the ball relative to those assortment gaps from last year and have really invested to make sure that we are covering the right price points. Lab-grown diamond fashion is a big part of that because of the on-trend nature and customer relevance of it, particularly in the fashion category. We've tripled our ownership of lab-grown diamond fashion below $1,000, have bigger increases below $500, and with particular focus on that $250 to $500 price point. We've also looked at what's the, within existing SKUs, what's the content of the assortment look like relative to trend. We sold through the on-trend merchandise we had last year. We did have other merchandise, but it was faded. We've worked hard coming out of last year and into the first part of this year to be clean from an inventory perspective and then make the assortment adjustments. Depending on the brand, you're looking at as much as 40% - 50% of an assortment shift, particularly within those price points. It's not just about the depth of ownership that was a big opportunity last year, but the content within it is something that we've been mindful of, particularly as we've tried to web the assortment changes to the brand positioning for each. Within Kay, that means really doubling down on milestone gifting as the big driver of assortment differentiation along with Mens. With Zales, it really is about more on-trend fashion assortment with particular focus on self-expression and stacking is a big part of that trend. Within Jared, you really have both of those trends at play, but at a more elevated price point for a more discerning higher-end customer who likely has the essentials in their jewelry box already and are looking to add to their collection. I think the focus that our teams have brought to the table, particularly in this environment where we've worked on shifting the long-term strategy and have made an awful lot of changes to our operating model, but to balance that with driving performance in the near term, I'm really pleased with where we are. Despite maybe all the external noise that's going on in the environment, I think our team is really well positioned and is navigating this dynamic environment well on behalf of our customers, who I think will reward us, but also the impact that it can have on shareholders. Two quick follow-ups. J.K., is the team fully built out now? Any other holes that you're seeking to fill? On square footage, Joan, I think it's now down 1%. Previously, it was down 1% to flat. Anything to take away there? Thank you. Sure. Let me take the first part of that question, Dana. I'm really pleased with the leadership team and the way that we've come together. I think the mix of experience, both Signet experience as well as industry experience and the diversity of thought that we've added to the team just makes us stronger. I think we're well positioned. We do have one leadership position that we are still interviewing for. It's a technology leader for the organization. I think that's going to be the last critical piece for us to fill. As I alluded in the last calls, that process is ongoing. We're getting close to a final decision there. Just like with the addition of Julie and Lisa and the elevation of Stacy, I'm confident that we'll add strength to the team, not only with the expertise in the area that we're looking for, but also someone who's going to be additive to culture and really be aligned with our purpose and our strategy in a way that can be a catalyst moving forward. Stay tuned. The team is largely set to the point of your question more succinctly. I'm excited about how well everybody's working together and our alignment on the strategy moving forward. To answer your question on square footage, it's really just the refinement of our store closure plan for the balance of the year. There's nothing more to take from that than just the refinement. Got it. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Jim Sanderson with North Coast Research. Your line is now open. Hey, thanks for the question. I wanted to go back to the fashion category for the quarter. Could you provide us what the unit decline was for the quarter? Yeah, we. The decline in the unit performance, sorry, J.K., was down high single digit in the fashion category. What you should take from that, Jim, is that the gold pricing in Banter had slowed the units there, which is typically what we see over time. The change in the promotional item strategy, particularly in Zales, was a strategic decision to move away from some of those lower price points and one that we would expect to continue in the back half of the year. Pleased with the overall fashion performance and the refinement of strategy. The gold prices, it was generally the external commodity gold pricing that was really the impact we saw in the Banter brand. Okay. In the bridal category, as far as your outlook for the fiscal year, do you expect the units in bridal to remain relatively flat, or do you anticipate some pickup or momentum heading into the back half of the year for units, not AUR? Yeah, it's relatively flat. You know, on the higher end, Jim might be at like up below single-digit level, but that's where that's the guidance. It's really remained unchanged from where we were, you know, last quarter in terms of our outlook view. Okay. One follow-up question more broadly on your assortment changes. Where do you think lab-grown diamond assortment mix will land as you build up the kind of value fashion assortments going forward? I think you said it was 7%, now up to 14% of sales mix. What's the right mix for the assortment you have in mind? Yeah, Jim, I appreciate the question. We haven't really given a penetration target in part because it's a function of both numerator and denominator, and we'd like to grow both. I'm probably not going to give you a target there. I do think when you look at our penetration from a share perspective, it's still relatively low in fashion. When you look at the growth that's driving the category, lab-grown diamonds are really the impetus for that. I'll underscore the point around category expansion. These are not replacements for something that exists today. Largely, the customer that is buying something like a lab-grown diamond tennis bracelet, for example, is not a core traditionalist that is choosing between a natural diamond or a lab-grown diamond. This is really about expansion of consumption overall for much of where that growth is. We still feel like there's runway there from a penetration standpoint. I think it's going to take a little bit of dimensionalizing. We'll probably answer this question on future calls because a lot of our fashion unit performance has been disproportionately grown through a brand like Banter at a much lower price point. As we move into what is really on-trend fashion, it will juice AUR, if you will, but it's almost apples and oranges because you're adding to the category. I think questions like yours in terms of how do you foot to a model is probably going to be something we'll talk about for a little bit as we find what the baseline for this can be. Still expect a lot of growth there. Interestingly, as we routinize it, particularly in those core brands of ours, we're seeing overall balance across AUR and unit growth, especially in Kay and Jared. Okay. Just one last follow-up question on marketing spending. I think this quarter you reported spending was a little bit higher than revenue growth. Is that the trend we should look at for the back half of the year? No, not necessarily. I mean, you know, we haven't really changed our budget for the year. What we have done is, you know, feed it if we, I mean, we're very focused from a performance standpoint. We were up 4% in spend. If we can see that that pulls through and we're going to grow profit based on that investment, then I think we've got our feet on the gas and the brake appropriately there. I would call it neutral overall. All right, thank you very much. Yeah, appreciate the questions. There are no further questions at this time. I will now turn the call over to J.K. Symancyk for closing remarks. Thank you. Thank you, everybody, for joining us today. In closing, I'd like to again thank our team for their commitment to delivering results this quarter. We're laser-focused on holiday preparations, and we look forward to sharing further results with you in December. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.