This article first appeared on GuruFocus .
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Q2 net sales grew approximately 6% year-over-year to $150 million, exceeding guidance.
-
Gross margin improved by 360 basis points sequentially, driven by operational levers and agile execution.
-
Fine jewelry bookings grew 32% year-over-year, with bookings at $500+ price points up over 40%.
-
Adjusted EBITDA of $5.8 million significantly outperformed expectations, with strong OpEx leverage.
-
Showroom bookings from walk-in customers grew 47% year-over-year, and the Beverly Hills flagship is performing well.
-
Company raised full-year adjusted EBITDA guidance to $13-$15 million, reflecting confidence in H2.
Negative Points
-
Total orders declined 2% year-over-year, with softness at lower price points.
-
Gross margin was down 40 basis points year-over-year, impacted by high metal costs and tariffs.
-
Q3 net sales expected to be flat year-over-year due to a strong prior-year comparison from tariff-driven purchases.
-
Consumer environment shows bifurcation, with weakness at lower price points.
-
Metal costs remain high by historical standards, posing ongoing margin pressure.
-
Inventory turnover of approximately 4 times is significantly above industry average, indicating potential overstock.
Q & A Highlights
Q: Regarding the Q2 EBITDA beat of $3 million to $4 million relative to the full-year guidance raise, it looks like it only captures a portion of the beat. Could you speak to what's happening there in terms of that dynamic and/or conservatism? Also, how should we think about what's embedded for order growth in the second half, and will you continue to see the sub-$500 orders outpace? A: Beth Gerstein (CEO) and Jeff Quo (CFO) explained that the company is strategically focused on the $500+ segment, which drove 5% order growth in Q2, and they expect this trend to continue. Regarding the guidance, Jeff noted that the raise actually includes both the full benefit of the Q2 beat and an increased outlook for H2 profitability, reflecting confidence in the initiatives that are "firing well." They are not being overly conservative but are embedding a dynamic environment response.
Q: The implied gross margin in the back half seems to inflect to year-over-year expansion, particularly in Q4. Can you help dimensionalize the drivers there? Are you embedding any further price increases? A: Jeff Quo (CFO) highlighted the success of operational levers, including the price optimization engine, dynamic pricing, thoughtful product design and specifications, and vendor procurement efficiencies. He noted that as they enter Q4, they will start comping last year's metal price increases, allowing for an optimistic outlook on gross margin expansion while still driving top-line growth, which he cited as a key example of using data to maximize gross profit dollars.
Q: You shared that showroom bookings from customers without an appointment grew over 40%. Does this speak to growing consumer awareness of the fine jewelry offering, or is it just more showrooms and foot traffic? How are you driving that, and what can we expect going forward? A: Beth Gerstein (CEO) attributed the strong showroom receptivity to a mix of factors: great digital merchandising, optimized inventory, increased brand awareness from successful marketing campaigns (e.g., the butterfly collection), and a focus on experiential retail that resonates with Gen Z and millennial audiences. She expressed confidence that this trend will continue, especially heading into Q4 and the holiday season, as fine jewelry interest in showrooms remains high.
Q: Marketing spend as a percentage of sales is down a bit. There are probably great opportunities to invest in marketing, and it may be more competitive during holiday. How should we model that, and what are you seeing with customer acquisition costs? A: Beth Gerstein (CEO) stated that the company takes a balanced approach to brand investment, focusing on increasing marketing efficiencies through internal data and technology capabilities. They use a full-funnel marketing approach and constantly optimize. While holiday will be a different environment, the team's strength lies in being dynamic and responsive to the environment, ensuring they invest appropriately while driving efficiency.
Q: Can you provide more color on the strong Q2 performance, specifically the gross margin improvement and operating expense leverage? A: Jeff Quo (CFO) detailed that Q2 gross margin was 57.9%, up 360 basis points sequentially, driven by agile execution on operational levers like dynamic pricing and vendor procurement, not just easing metal prices. He also highlighted 250 basis points of year-over-year leverage in adjusted operating expense, with marketing down 130 bps, employee costs down 40 bps, and other G&A down 80 bps, all while expanding the sales team, showcasing the strength of the asset-light, data-driven model.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
