Although sales were down, Signet Jewelers’ second-quarter report and forecast show how the jewelry giant is massaging the cautious consumer to spend and feeling optimistic about an increase in wedding engagements going into 2024.

On Aug. 31, Signet reported sales of $1.6 billion for the quarter ended July 29, a decrease of $141.3 million of 8.1% from the second quarter of 2022. Its same-store sales, often considered the best judge of a retailer’s overall health, were down 12%.

However, Signet officials reaffirmed the company’s full-year revenue outlook based on trends it is seeing and its efforts to bring customers into stores, to contain labor costs, to create the right affordable yet everyday luxury product mix, and to boost the profitable repair and extended-warranty business in its stores.

“In a challenging environment, we overdelivered on our commitment,” Signet CEO Virginia C. Drosos told investment analysts and media on the company’s earnings call. Signet’s stock, which trades under the symbol SIG, jumped more than 6% immediately after the call.

Drosos noted that due to concerns about the economy, “consumers will wait a bit later into the holiday season to start shopping, delaying their shopping to Black Friday and the days leading into Christmas.

“We’re building our labor, marketing, and merchandising to the back half [of the holiday season] with this in mind,” she added.

Here are some highlights from Signet’s press release on second-quarter results as well as its earnings call:

• Signet saw “modest improvements” in customer store traffic and indicators that engagements will start to rise in late 2023 as part of an anticipated three-year recovery, Drosos said on the conference call. Customers are going for lower price points in fashion jewelry at Signet brands like Kay and Banter by Piercing Pagoda.

• Drosos said Signet’s propriety data shows that the slowdown in engagements from the pandemic seems to be ending. Signet studies 45 milestones in a couple’s dating-to-engagement process, and these points signal a recovery in the sector, for which Signet plans to boost in-store support and its lab-grown diamond offerings, as younger couples are gravitating toward those stones. Bridal overall, inclusive of engagements, historically represents nearly 50% of Signet’s merchandise sales.

• Signet is looking toward the holidays by bringing in more yellow gold at Kay and other brands and more everyday styles, such as hoop earrings. Personalized charm collections and piercings (a Banter specialty) are potential growth areas, Drosos said.

• Repair business and extended-service agreements are helping Signet overall, Drosos said, mentioning Signet’s July acquisition of SJR National Repair. Together with Signet’s Blue Nile Seattle fulfillment center, SJR’s repair network has more than 260 locations and more than 1,800 jewelers, the second-quarter report said.

• Drosos noted that lab-grown diamonds are offering higher margins for Signet on average than natural diamonds, and that in response to consumer demand, Signet is likely to increase investment in lab-growns. Consumers who may have intended to buy an engagement ring with a natural diamond often end up purchasing one with a lab-grown diamond because they can get a larger stone and higher quality for their budget, Drosos said.

• Signet reported repurchasing approximately 0.7 million shares, or $43.3 million, in its second quarter. During the first half of its current fiscal year, the company has repurchased approximately 1.2 million shares.

• Signet’s third-quarter outlook is based on its expectations that the U.S. jewelry industry’s revenues will be down because of macroeconomic factors affecting consumer spending, the company said.

Top: Tubogas 18k yellow gold jewelry at Jared (photo courtesy of JCK)

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