Couples may be in love, but they’re holding off on getting engaged.
Diamond retailer Signet Jewelers’ stock fell by more than 11% during afternoon trading on Wednesday (Mar. 20), putting it on track to reach its lowest level since September 2022. That’s after the company’s fourth-quarter earnings report, when it warned of a grim outlook for its 2025 fiscal year.
But that isn’t deterring Bermuda-based Signet. “We believe the shape of this year’s engagement growth will have a more material impact in the second half of the year, as customers continue to plan the majority of engagements around October through February,” chief executive officer Virginia C. Drosos said during the company’s earnings call.
Signet generated $2.5 billion in revenue during the period at about $6.73 earnings per share. While the company surpassed analysts earnings per share estimate of $6.33, it lagged in beating revenue expectations of $2.56 billion.
The company, considered to be the world’s largest diamond jewelry retailer with brands like Kay, Jared and Diamonds Direct, reported net income of $626.2 million during its fourth quarter, which ended Feb. 3.
Customers are backing away from committing — at least to Signet. The company saw a 10% decline in sales during its holiday quarter, led in part by a “deep disengagement” from consumers, and excess inventory, Signet’s Drosos said.
Drosos said the decline in sales was also affected by independent jewelers who gave consumers “accelerated discounts on lab-created diamonds.” Signet prides itself on making natural diamonds.
Signet operates an estimated 2,700 locations globally primarily under brands such as Kay Jewelers, Zales, Banter by Piercing Pagoda, and others.
Signet’s guest list
While a number of factors could be to blame for Signet’s sales decline, the real culprit may be its weak guidance forecast.
For its fiscal year representing 2025, the company is expecting total sales to be between $6.66 billion to $7.02 billion, and earnings per share to range from $9.08 to $10.48. It is forecasting that same-stores will be down 4.5% and up 0.5%.
As part of a three-year cost savings initiative, Signet’s board is expanding its company’s share buyback program from approximately $650 million to $850 million. Looking ahead, Signet said it expects a three-year recovery in U.S. engagement rates, with engagements increasing 5% to 10% in 2024. The company said it plans to invest about $160 million to $180 million to open 20 to 30 new stores, while also renovating 300 Kay, Jared and Diamonds Direct locations and improving e-commerce capabilities.