Sales of fine jewelry fell when Covid hit and couples postponed engagements and weddings. The pandemic slowdown could have been an opportunity for Signet to strengthen its position in the growing online market for luxury items. Instead, Signet stuck to focusing on its traditional bridal business, and it was caught flat-footed when weddings rebounded last year.
Last week, the company reported a 12% drop in same-store sales in its second quarter, continuing a streak of weak results. To see what’s wrong, Signet need only look over its shoulder. Trendy online retailers such as TheRealReal and Net-A-Porter have been selling fine jewelry on the internet since at least 2016. Virtual try-on technology emerged more than a decade ago, when JCPenney shoppers could use augmented reality to see how clothes would look on them using a webcam. Yet Signet added virtual tools like try-ons and chats only a few years ago.
Signet maintains a full rebound is just around the corner. The company, which is based in Akron, Ohio, did announce a three-year turnaround effort in 2019 to bolster its online business by adding jewelry personalization options online, features that other retailers already offer. It has also made acquisitions to strengthen its e-commerce business, including Rocksbox, a jewelry rental subscription business, and Diamonds Direct, an online affordable fine jewelry company, both in 2021. Last year, it bought Blue Nile, an online retailer of engagement rings and fine jewelry.
But these moves have come too late to catch sales stemming from the wedding revival last year. On a conference call last week to discuss Signet’s quarterly results, executives appeared to be asking investors for patience, saying that according to tracking of “45 proprietary milestones” in a couple’s life, the industry will begin a “multiyear recovery” in engagements at the end of this year.
Missing from this equation was a plan to adapt to sharply shifting consumer tastes and budgets. That includes changes to romance rituals. Valentine’s Day has become less of a moment to buy fine jewelry. Couples are choosing to celebrate anniversaries in new ways — experiences, homemade gifts, dinner — instead of a $400 silver heart necklace that shoppers once would have purchased at the mall.
Signet has missed out on other trends. Companies such as Brilliant Earth Group Inc., a fine jewelry retailer, uses recycled metals and sources diamonds from non-conflict areas. After launching online, Brilliant Earth began opening showrooms in upscale communities in La Jolla, California, and Denver. The company now has more than 30 stores. In 2022, its second year as a public company, it grew sales by 15.7%; Signet’s same-store sales fell 6.1% in the same period.
Meanwhile, other companies have jumped into the bridal arena, including fine jeweler Mejuri Inc. E-commerce retailer Etsy Inc. recently launched a bridal registry that sources from its own independent sellers. Another rival, Denmark-based Pandora A/S, has moved away from targeting couples in the market for an engagement ring. Instead, the jeweler began courting shoppers who are buying themselves a gold necklace to celebrate a promotion or a set of diamond earrings after getting a big annual bonus. The strategy has paid off, with Pandora’s stock gaining about 42% this year.
Signet also has work to do to repair its image after a drawn-out gender discrimination lawsuit that accused the company of bias in pay and promotions. (The case was settled in June 2022, with the company’s Sterling Jewelers unit agreeing to pay $125 million to roughly 68,000 female retail sales workers.)
To be fair, the economy has put some strain on Signet’s core middle-class shoppers. Signet’s sales of jewelry priced at $5,000 or more remain strong, but sales of lower-price fashion jewelry have slowed, a development the company attributes to elevated inflation biting into discretionary spending.
There are signs that its turnaround plan may be starting to bear fruit. Signet cut $96 million worth of costs last year and told investors to expect similar savings this year. Signet has closed hundreds of unprofitable stores and opened new ones at off-mall shopping centers that get more shopper traffic. It has also cut margin-squeezing promotions.
What’s harder to say is whether consumers are willing to give the company a second chance, or if they have already moved on.
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Leticia Miranda is a Bloomberg Opinion columnist covering consumer goods and the retail industry. She was previously a business reporter at NBC News and a retail reporter at BuzzFeed News.
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