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 Zeles, told investors on 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 lockdown in 2020 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. The recent turmoil in the banking industry has added to that uncertainty.
The economic downturn has left many households reluctant to spend large sums of money on big-ticket items such as gorgeous diamond rings and custom-made wedding dresses, as many households worry about their savings and job security. there is a possibility.
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. While high-income earners can tap into their savings and continue spending, 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 Early 2023 will also include strong growth in jewelery.
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 Jewelers and Zareth, shoppers may be pulling back.
“We’re starting to see some softening in the relatively isolated higher end of the spectrum, while the lower end continues to come under pressure,” Signet finance chief Joanne Hilson said on a conference call Thursday. .
Signet hopes demand for wedding rings will pick up. She predicts that between 2024 and 2026, there will be 500,000 more engagements in the US than pre-pandemic trends, as lockdown delays in dating lead to matches.
But Shane McMurray, founder of Wedding Report, is skeptical that engagements will take a big gap year. 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 slump 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.”
