People who are working from home are still getting dressed up from the neck up for videoconference meetings, and Signet Jewelers Ltd. Chief Executive Virginia Drosos says earrings and pendants are selling as a result. But the jewelry category is expected to take a hit in 2020 due to COVID-19.
Drosos told MarketWatch that “Zoom-worthy jewelry” and bridal pieces like engagement rings continue attract consumers during the pandemic.
“Consumers are buying jewelry that represents the times,” Drosos said, highlighting things that are top-of-mind for consumers these days like good health and strong relationships. “We aren’t celebrating by going out to dinner or on a big vacation so buying something that memorializes where we are is important to people.”
Many shoppers, even those buying jewelry, are heading to e-commerce sites to make a purchase or do research. “Jewelry is a category that has moved slowly to online,” Drosos said.
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Signet (SIG) reported a 72.1% year-over-year e-commerce increase in its second-quarter earnings report on Sept. 3. August e-commerce growth was 65.2% according to a statement from Drosos in that report.
Revenue for the quarter was $888 million, down from $1.36 billion last year. Same-store sales fell 31.3%. Signet reported a narrower-than-expected loss per share of $1.13.
Shoppers are finding a reason to add a little bling to their coronavirus-casual outfits with a jewelry addition.
“The category was repositioned over lockdown as a way for consumers to dress up casual pieces,” reads a report from Edited, a retail market intelligence platform. “Statement earrings and bold necklaces were promoted under this theme and promoted as ‘webcam wins.’”
Though these items are still finding an audience, many are not selling at full price.
“Analyzing the level of discounting taken on jewelry categories shows items such as earrings and necklaces reduced at a lower rate than in 2019,” said Edited market analyst Kayla Marci.
Marci said earrings have an average discount of 31% compared with 35% last year, while necklaces are discounted at an average of 27% versus 35% in 2019. Based on the women’s items available for spring/summer 2020 in the U.S., the popular pricing was between $15 and $20.
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“This indicates they don’t require such steep markdowns to sell through and with their entry price point serving as an option for consumers to treat themselves as a simple, low-cost way to dress up an outfit for video conferences or virtual events.”
In fact, sales in the category are expected to take a sharp 17.7% in 2020, according to Euromonitor data.
U.S. jewelry sales were $73.08 billion in 2019 and are expected to fall to $57.76 billion in 2020, a 21% drop.
Signet’s Drosos and others in the jewelry business are upbeat about the prospects for continued bridal jewelry sales during the pandemic.
“Engagement and wedding jewelry will never go out of style: pandemic or not, love will continue,” said Madeline Fraser, founder and chief executive of Gemist, a direct-to-consumer jewelry seller that has seen an increase in home try-ons since the beginning of the year.
“People are still getting engaged and married during this time, they are just doing it slightly differently.”
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However, that category is also getting hurt by the pandemic, according to Euromonitor.
“While jewelry sales are facing constraints from stores closures and consumers’ prioritization of essential goods over more discretionary items, the category is also being severely impacted by the postponement and cancellations of major life events, especially weddings,” Euromonitor wrote in a July report.
“With many churches closed and large gatherings banned, consumers are postponing their weddings and the subsequent fine jewelry purchases that go along with them until next year at the earliest.”
Signet’s Drosos said the company, like most others in retail, is prepared for an earlier start to holiday shopping, with expectations that the Thanksgiving holiday weekend will still be a big one for the season.
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Signet is scheduled to report third-quarter earnings on Nov. 24, according to FactSet. Signet stock is down 7.8% for the year to date, but has soared nearly 90% over the past three months.
The Consumer Discretionary Select Sector SPDR ETF (XLY) is up 19.8% for the year to date while the S&P 500 index (SPX) has gained 5.5% for the period.