Signet still loves lab-created diamonds, but for fashion

Despite Signet's collaboration with De Beers, and its new consumer warnings As synthetic diamonds can lose value, executives of the jewelry giants say they have not deteriorated with synthetic diamonds (LCD), but will focus on fashion in this category.

In the fashion sector, we see significant runway for the expansion of LCD displays in an industry segment that has traditionally seen lower overall penetration of natural diamond.[s]. This is an opportunity for discussion, Signet CEO Gina Drosos said on a conference call following its first-quarter financial results, according to a Transcription SeekingAlpha.

“We have increased our LCD fashion offering, resulting in a 14% increase in LCD fashion revenue compared to last year,” she said. “These LCD fashion pieces carry more than twice the weight [average transaction value] of non-LCD parts with attractive margins for Signet.

Signet expects engagements to increase as the year goes on, based on its tracking of post-COVID relationship patterns, Drosos said.

Starting in April, Signet retrained all of its associates to feature natural diamonds ahead of LCD alternatives for engagement rings. Joan Hilson, Head of Finance, Strategy and Services at Signets, explains JCK it's too early to tell if it made a difference.

Drosos said on the conference call that she expects prices of lab-created products to continue to fall. There is significant availability. Production has become much more efficient. Costs have fallen. Retail [prices] have declined at a slower rate, but are still under pressure. This is why it is necessary to have a good strategy regarding this.

In contrast, Signet expects natural diamond prices to return to a normalized level, Drosos said.

Hilson suggested that Signet was concerned that lab-induced price drops would hurt the average price of engagement rings.

As [lab-created] as prices fall, this affects loose stones, particularly in the engagement sector, she says, but adds that Signet has been able to “balance out” any decline with “special brands and cuts”.

Signes has added a new consumer advisory regarding synthetic diamonds, which clarifies that their relative abundance does not guarantee that their value will be maintained over time. websites as well as all sales receipts created in the laboratory. The messages aim to educate the consumer about the market as a whole, according to Hilson.

They include terms that sellers of synthetic products would not object to, claiming that LCDs “are cheaper and make larger diamonds more affordable” and have “the same optical, physical and chemical properties as natural diamonds.” .

Signet is certainly one of the largest synthetic diamond retailers in the world. Its overall sales totaled $7.2 billion in fiscal 2024, and Drosos said JCK that synthetic diamonds represent a small percentage of adolescents. Putting the figure at 12%, that means Signet sold about $864 million worth of lab-grown jewelry last fiscal year.

In its financial results for the first quarter of fiscal 2025 (ended May 4), Signet reported a 9.4% decline in sales, to $1.5 billion, from the previous year. Comps fell 8.9% on an annual basis. Operating profit was $49.8 million, down $51.9 million from the first quarter of fiscal 2024.

Drosos said that although February sales were weak, business picked up in March, April and especially May, and Signet hopes to return to positive results in the second half.

We continued to see a highly promotional program [jewelry] category, Drosos said. Independent jewelers were significantly overstocked over the past 18 months. This has now returned to a more normalized level.

On the positive side, Signet has seen strength in its services business and newness, she said. It has also reduced outstanding debt by 70% since FY20.

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