Industry / Retail

Signet Believes Engagement Rebound Is Coming


An increasing number of couples are getting engaged, which will boost jewelry sales this holiday season and in the year ahead, Signet’s chief financial, strategy, and services officer Joan Hilson (pictured) tells JCK.

“We believe that engagements hit a trough in [the most recent] quarter,” she says. “That bridal trough is behind us.”

Signet has developed a suite of metrics to predict engagements—made up of 45 relationship milestones, such as attending a concert together, that it believes signal a couple’s growing commitment. Those stats show that engagements fell sharply because the COVID-19 pandemic put a crimp in everyone’s social lives. Signet expects engagements to remain down for some time, but it predicts they will start to recover in the months ahead and gain steam over the coming year.

It helps that young people still believe in marriage. “In our research and surveys, nearly 80% of nonmarried millennials and Generation Z adults want to get engaged,” Hilson says.

Hilson says lab-created diamonds represent about 14% of its diamond sales and 10% of its overall business. Though lab-created’s market share has generally grown, in recent months the rate of increase “really tailed off,” she says.

While Signet is boosting marketing efforts this holiday, don’t expect the retailer to blanket the airwaves with TV commercials, as it has in the past. Pre-pandemic, Signet spent 25% of its advertising dollars on digital marketing and 75% on television ads. That’s now flipped to 60% on digital, 40% on television, Hilson says.

Although Signet’s comps fell during its most recent quarter, Hilson feels good about the results, noting that profits came in at the high end of guidance.

“This is four years in a row [that] Signet has been able to deliver profits in the [third] quarter, where historically there have been years when we have not done that. This is all while we’re investing in marketing for the holiday season ahead. We’re really pleased with the structural operating changes in our business that continue to enable to us to drive a third-quarter profit.”

She was particularly pleased that Signet’s inventory was down over $300 million, which increased free cash flow by nearly $100 million.

“That has to do with the strong inventory discipline that we put in place,” she says. “When you look at our clearance levels of inventory, compared to pre-pandemic, it’s down 50%.” There’s also a “healthy level” of consignment inventory, she adds.

“We like the composition of our inventory,” she says. “It enabled us to bring in newness for the holiday season, and we found that sell-through is 30% better on our newness offerings.”

Signet’s strategy to boost repair and other services has also improved the bottom line, she says.

(Photo courtesy of Signet)

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By: Rob Bates

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