Signet Jewelers cuts outlook on drop in demand for engagement rings

Signet Jewelers, one of the world’s largest jewellery retailers, cut its full-year outlook with it blaming a Covid-induced lull in dating and a reduction in discretionary spending for the fall in demand for its engagement rings.

The parent company of Zales and Kay Jewelers expects total sales of $7.1bn-$7.3bn in its current fiscal year, compared with previous forecasts of $7.67bn-$7.84bn.

Diluted earnings per share are anticipated to be between $9.49 and $10.09, down from $11.07 to $11.59 a share.

Engagement rings make up nearly half of Signet’s sales, and the company on Thursday flagged fewer engagements in the latest quarter, saying that the onset of the pandemic in 2020 had disrupted the typical three-year timeline from dating to ring purchase.

“We expected the low double-digit decline in engagement that we saw this quarter, similar to the fourth quarter,” said Virginia Drosos, chief executive, on a call with investors. “We expected to see units decline, but we also expected growth in average transaction values, which did not materialise.”

“People are still getting engaged but buying a ring at a slightly lower price,” she added.

Signet reported widespread promotions in the bridal industry and expects discounts and weak spending on discretionary items to continue for the rest of the fiscal year.

It had previously said that it did not expect a rebound in demand from lower-income consumers, as inflation and a drop in demand for wedding and engagement rings weighed on discretionary spending. But analysts at Citi said the cut to its guidance was “even bigger than we expected”.

Shares in Signet fell nearly 10 per cent to $62.75 in afternoon trading in New York. Shares in Danish jeweller Pandora fell about 4 per cent.

Signet and other jewellers face structural changes with couples delaying marriage and fewer Americans opting to get married. According to the US Census Bureau, the median age at first marriage for men and women in 2022 was 30.1 and 28.2 years, respectively, up from 28.6 years for men and 26.6 years for women a decade ago.

Sales fell 9.3 per cent to $1.67bn in the first quarter from a year ago, roughly in line with analyst expectations, which the company variously attributed to lower tax refunds, economic worries triggered by regional bank failures, and inflation.

Same-store sales declined 13.9 per cent. Sales in North America and its smaller international segment declined 8.4 per cent and 15.5 per cent in the first quarter, respectively.

Diluted earnings per share were $1.79 in the first quarter, which was above analysts’ expectations for earnings of $1.47 per share and a loss of $1.89 in the same quarter a year ago.