This holiday’s jewelry sales may fall from last year’s record-breaking results, but the jewelry category seems poised to keep most of the gains it made during the pandemic, Signet CEO Gina Drosos (pictured) tells JCK.
“[Signet] grew our revenue 50% last year,” she says. “So to be 3% up from that kind of record year, and we were down not that much in comps, I think we are going to keep most of the gains we got in the last year, even in a tough consumer environment. It’s a strong result for the jewelry category and for Signet.”
She feels the industry saw the long-expected post-COVID pivot back to experiential spending and travel over the summer. However, lately the industry has faced a different challenge—a tough consumer environment.
“Now, it’s people being more conservative, not knowing if we’re headed to a long recession or just a correction,” she says. “It’s a different phenomenon.”
She notes that some of the general decline the industry saw during October could stem from consumers wanting to start their holiday shopping earlier last year, due to an expected supply-chain crunch. But this year, she says, consumers have reverted to a more traditional shopping pattern, and there was strong traffic on Black Friday.
Overall, she feels that the “trends bode well” for jewelry this holiday.
“The phenomenon that we saw in COVID—fewer gifts for fewer friends, but people buying more meaningful jewelry—does well in a recessionary environment. It’s something that commemorates a special person or special occasion. It retains or appreciates in value in an environment where people are watching their purchases.”
The news comes as Signet’s comps fell 7.6% during the third quarter of fiscal 2023 (ended Oct. 29), but it beat expectations for profits and revenue. Revenue for the quarter was $1.6 billion, up 2.9% from the prior year. It also generated non-GAAP operating income of $58 million—a higher-than-expected number—and a strong result for the traditionally unprofitable third quarter, Drosos says. Signet’s full financial results can be seen here.
Signet saw its best performance among higher-income customers, with its average transaction value up 7.8% in North America, even as the overall number of transactions fell. Signet’s higher-income consumers now represent approximately 30% of its business, up nearly 10 percentage points from the pre-pandemic period, Drosos says.
“Every banner, every category, we have done better at higher price points,” she says. “We have tiered up our price points across the board. Zales had really great results at higher price points, so has Kay. To change your mix as dramatically as we have is pretty incredible. The accessible luxury segment went from 20% of our sales to 30%. We are using our data to target higher-income customers and get a younger, more diverse customer.”
Signet has also found that the number of engagements dropped in 2022 from a COVID-era peak, but, as this has also been a record year for marriage ceremonies, it has tried to “own the wedding” by focusing on wedding and anniversary bands as well as watches as gifts.
“Our research has found that 43% of the spending a couple does for a wedding is on jewelry. We’re getting to know both the groom and the bride.
“When engagements are up, it’s easy. But now we are thinking differently. It gives us a chance to exercise muscles that we wouldn’t have to otherwise.… It’s an opportunity for us to build other skill sets.”
Drosos says that lab-grown diamonds, which the company recently introduced on Blue Nile, are doing well.
“It’s an interesting new thing,” she says. “They are still single digits as part of our diamond mix. It’s offering a different choice for consumers, some of whom find it interesting, especially in a tough economic environment. But it’s still a small part of our sales.”
The company also raised its full-year guidance from $7.77 billion to $7.84 billion. But that’s inclusive of Blue Nile, which was purchased in the third quarter and wasn’t included in the prior guidance.
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