Signet Jewelers posted mixed results for the third quarter of fiscal 2024 (ended Oct. 28, 2023), with comps and profits down from last year.
Same-store sales at America’s largest jeweler fell 12% in the quarter, compared with the same period last year. Overall sales totaled $1.4 billion, a drop of $190.8 million, or 12%. Operating income came in at $13.3 million, down $35.1 million.
On a conference call following the release of Q3 financial results, Signet CEO Gina Drosos and chief financial and strategy officer Joan Hilson said the company was facing “serious headwinds” but called out certain trends in the jewelry business as also having an impact.
“We continue to expect a gradual return to pre-pandemic levels of engagements that will play out over the coming three years,” Drosos said, according to the SeekingAlpha transcript. The pandemic led to a 25% drop in engagements, but “the engagement recovery has begun,” said Drosos.
“Google searches for engagement rings are now 10% higher than last year, the first time they’ve exceeded the prior year in nearly two years,” she said. “The percentage of couples moving to the engagement phase has improved by five points, a statistically significant movement over the last 18 months.”
Drosos added that Signet has spotted “positive attitudes among younger, unmarried consumers toward getting engaged and married,” and that “the majority of engagements in the U.S. will be multicultural, led by growth in Hispanic Americans.”
Signet expects prices to stabilize for both mined and lab-grown diamonds. “The natural diamond oversupply situation, which has been pressuring retail prices, is beginning to abate,” said Drosos. “Independents have been buying less in recent months, and their inventory levels have improved.”
She said that the “natural diamond market should normalize through next year,” and that she was happy to see De Beers “stimulating category demand with a branded natural diamond marketing campaign over the holiday season.”
Drosos noted that Hispanic customers “tend to have a preference for natural diamonds over lab-created.”
She said lab-grown diamonds remain in the “low teens as a percentage of our total diamond business, so still not high. But we have seen [lab-grown diamond sales] level out a bit. It was growing much more quickly earlier in the year.”
Lab-grown diamond prices have “come down considerably this year,” Drosos said. “Growers are now pretty much at the bottom of the cost curve. The costs that we’re seeing are really not much more than the cost of the ingredients, the power to make them, and a small margin on that. So we don’t see much movement in the future on cost.”
Hilson said Signet has been able to “balance pricing very nicely through branding of [lab-created diamond] product, special shapes. We believe that [lab-created] in fashion, as an example, is a nice way for us to expand our fashion business.”
The company hasn’t seen much change in the consumer mood, the execs said. “We have for a while now expected it to be a late holiday,” Drosos said. “Consumers are very deal-conscious, really waiting to make sure they’re getting the best deal they possibly can. Our Black Friday weekend results were in line with our guidance range. That tends to be a lower-priced part of the jewelry category sales; that’s not the area that we compete in as much. But we had strong results across all of our banners on price points under $1,000.”
Hilson announced that Signet has sold 15 U.K. luxury watch stores to Watches of Switzerland for $53 million. Signet also repurchased $35 million in stock and declared a quarterly cash dividend on common shares of $0.23 per share for the coming quarter.
Top: Signet’s headquarters in Akron, Ohio (photo courtesy of Signet Jewelers)
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