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Signet Jewelers Blames Pandemic for Dip in Engagements

Signet Jewelers Ltd., the owner of Kay Jewelers and Zales, sent shockwaves through the global diamond trade on Wednesday, telling suppliers it would no longer buy stones mined in Russia, the world’s biggest source of gems.
Signet Jewelers blames pandemic for dip in engagements. (Shutterstock)

The owner of Kay Jewelers and Zales attributes the dip in engagements this year to the dating dry spell during the depths of the pandemic.

Couples typically get engaged three years after they start dating, said Gina Drosos, chief executive officer of Signet Jewelers Ltd., one of the world’s largest jewelry companies. But the Covid-19 pandemic put many people’s dating lives on pause and, as a consequence, there’s been a decrease in the number of engagements this year, she said in an interview. Signet expects proposals to pick up toward the end of this year and continue to rebound in 2024.

That dip in demand drags on Signet’s business, since engagement and bridal jewellery typically represents around half of its annual sales. Despite the headwinds, Signet reported fourth-quarter earnings per share on Thursday that beat analysts’ average estimates. Shares rose as much as 14 percent on Thursday.

The company will continue to expand its market share at the expense of the smaller mom-and-pop stores that dominate the fragmented jewellery market, Drosos said. While overall revenue in the US jewelry industry is expected to fall by a mid-single-digits percentage this year versus last, Signet expects annual sales growth to be slightly down to flat.

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In a testament to its continued market expansion, Signet on Thursday said it’s targeting $200 million in capital investments in the current fiscal year. Drosos said that’s the most since she became CEO in 2017.

Around $50 million is earmarked to open new stores and reposition others away from underperforming malls. Another $50 million will be spent on refurbishing the company’s 2,600 stores around the globe and getting them up to Signet’s sustainability standards, including installing LED lights and new heating, ventilation and air conditioning systems.

“All of our stores are profitable,” Drosos said. “So investing in them makes sense.”

An additional $100 million is targeted for digital investments, including more machine-learning programs and improving e-commerce capabilities.

“Even when the jewellery category is down and experiencing challenges,” she added, “Signet still has the financial strength to invest.”

By Jeannette Neumann

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