As the aftershocks of the coronavirus pandemic continue to rumble through the U.S. economy, Signet Jewelers announced something surprising this week. The company said it has cut sales of engagement rings this year because it failed to meet the needs of singles who were stuck at home during lockdown. – I will be engaged in 2020.
Virginia C. Drosos, chief executive of Signet, which owns Kay Jewelers and Zails, told investors Thursday, As a result, engagement declined in the quarter.” Shares of Signet, the largest U.S. jewelery retailer, fell after the company lowered its sales and earnings forecasts for the year.
In some ways, the engagement ring is a glorious microcosm of the American economy. The bridal jewelery business has been hit by the delayed impact of the pandemic, rapid inflation weighing on consumers and heightened shopper tension.
Some of the volatility is purely due to the pandemic. The mass cancellations of weddings during the 2020 lockdown were expected to level off over the next few years as they rebound in late 2021 and into 2022 and return to more typical patterns. Wedding-related activity appears to be showing early signs of a slowdown in 2023, but whether that’s due to the dating drought in 2020 or simply years of later and fewer marriages, according to Signet. It is unclear whether it will revert to
what is clear? Wedding trends are also tied to wider and potentially longer-lasting economic implications. Signet sales are down not only because fewer people are on one knee, but also because ring shoppers are becoming more cautious amid rapid inflation and growing uncertainty about the direction of the economy. may be because they are cutting back on spending. Both the volume and value of jewelery sold by Signet declined in the last quarter.
Drosos said the company “expected the low double-digit decline in engagement we saw this quarter,” but said other factors were also at play. “Recent consumer confidence, declining tax refunds, economic uncertainty stemming from the collapse of a local bank, and continued inflation are likely to weaken spending across the jewelery industry,” she added.
Consumers face major challenges this year. As measured by the Personal Consumption Expenditure Index, prices have risen cumulatively by about 15% over the past three years. Inflation has slowed in recent months, but many workers feel wages are lagging.
The Fed is raising interest rates to cool the economy and counter persistent inflation. Not only will it become more expensive for consumers to shop and take out loans on credit, but volatility in interest rates will also make it more likely that the economy will slip into recession.
With many households seeing their savings dwindling and worrying about job security, they may be reluctant to spend on big ticket items like fancy diamond rings and custom-made wedding dresses.
David’s Bridal, a wedding dress retailer, suggested some brides were becoming more budget minded amid a bankruptcy filing earlier this year.
“More and more brides are opting for non-traditional wedding attire, such as second-hand wedding dresses,” said James Markham, the company’s CEO. Court submission.
Like many economies, the wedding industry is showing signs of fragmentation. High-income earners are able to tap into their savings and continue spending, while low-income households spend a greater percentage of their income on food and other necessities. Cracks begin to form under the weight of inflation.
Luxury retail group LVMH, which owns jewelry stores such as Tiffany & Co. continuous growth Expectations are high in early 2023, including strong jewelery sales.
LVMH’s chief financial officer, Jean-Jacques Guiony, told investors in April that “everyone expected 2023 to be a terrifying year for the US luxury industry,” adding that the collapse did not materialize. explained. “It’s normalizing, but not bad.”
But at mass-market brands like Kay and Zareth, shoppers may be pulling back.
“We’re starting to see some softening in the relatively isolated high end, and the low end continues to come under pressure,” Signet finance chief Joan Hilson said on a conference call on Thursday. rice field.
Signet hopes demand for wedding rings will pick up. It predicts that there will be 500,000 more engagements from 2024 to 2026 than pre-pandemic trends indicate, as lockdowns lead to delayed dates leading to matches. But Bank of America analysts wrote they were “concerned that some of that recovery could be offset” by lower spending on jewelery by “stressed-out consumers”. there is
Wedding Report founder Shane McMurray is skeptical about having a big gap year during an engagement. He expects weddings in 2023 to drop 20% from 2022 levels as trends return to normal. Lyman Stone, research director at consulting firm Demographic Intelligence, also agrees that the current wedding downturn may not reflect a temporary decline, but a return to previous trends. bottom.
“2023 is going to be a sluggish year,” he said. “I think it’s a bit of an overstatement to blame the 2020 lockdowns for that.”
