What Signet Jewelers Ltd. told the SEC could break it.

Signet's natural-diamond supply depends on a highly concentrated global rough-diamond market. Alrosa, a Russian natural-diamond mining/distribution company, supplies more than 30% of the world's natural diamonds; U.S. and other government sanctions against Alrosa and Russian oligarchs have limited, and may further limit, the world's natural-diamond supply. Because the world's sources of rough natural diamonds are concentrated in a limited number of countries, sanctions-driven supply restrictions can raise costs and constrain availability of Signet's core raw material.

“Alrosa, a Russian natural diamond mining and distribution company, supplies more than 30% of the world's natural diamonds. Sanctions against Alrosa specifically or the Russian Oligarchs by the US government or other governments have limited and may further limit the supply of natural diamonds in the world.”

Signet imports the majority of its finished jewelry and loose diamonds from India and key amounts from Italy, plus supplies/fixtures from China, Mexico and Canada — all exposed to the series of new U.S. tariffs announced since February 1, 2025. Q2 Fiscal 2026 saw significant new tariff activity on India and Italy specifically (where Signet buys significant merchandise and diamonds). The company says it can now mitigate the majority of the higher tariffs via strategic sourcing (production timing, country of origin, value engineering), but additional or increased tariffs could force price increases or compress margins.

“The second quarter of Fiscal 2026 saw significant activity on new tariff announcements on countries such as India and Italy, where the Company purchases significant amounts of merchandise and diamonds. We believe that we are now able to mitigate the majority of the higher tariffs through strategic sourcing initiatives by working with vendors to maximize production timing and country of origin, as well as by value engineering merchandise at the right price points.”

Signet's costs are driven by fluctuations in the price and supply of its core raw materials — natural and lab-grown diamonds and gold (and, to a lesser extent, other precious/semi-precious metals and stones). Gold-price exposure is actively hedged with commodity forward purchase contracts (a 10% gold-price move shifts those contracts' fair value by ~$17 million), and rising gold prices in Fiscal 2026 also drove higher scrap-recovery margins. Sustained spikes in diamond or gold prices pressure merchandise margins to the extent they cannot be passed through.

“The Company's costs, as with the jewelry industry as a whole, are generally affected by fluctuations in the price and supply of natural and lab-grown diamonds, gold and, to a much lesser extent, other precious and semi-precious metals and stones.”

Signet's supply chain is geographically concentrated: the majority of its purchased finished jewelry and loose diamonds is imported from India (with other key sourcing in Thailand, Italy, China, Botswana and Japan), reflecting India's dominance in third-party diamond cutting and jewelry manufacturing. Separately, Signet operates quality-control and technology centers in Israel; Middle East conflict could disrupt those operations — delaying product quality certification, affecting its digital/e-commerce platforms, or impacting Middle East-based vendors. Concentration in these regions exposes its supply to country-specific labor, political, transportation and conflict risks beyond tariffs.

“the majority of finished jewelry and loose diamonds that Signet has purchased have been imported from India. Other key sourcing countries include Thailand, Italy, China, Botswana and Japan.”