The aftershocks of the coronavirus pandemic continue to rattle the US economy, and Signet Jewelers shared a surprising finding this week: The company is selling fewer engagement rings this year because, it says, singles who were stuck at home during the lockdown are looking for their Failed to fulfill wish -Become Fiancee in 2020.
“As we predicted, there were fewer engagements in the quarter as a result of the disruption of dating from COVID three years ago,” Virginia C. Drosos, chief executive of Signet, which owns K Jewelers and Zells, told investors Thursday. Shares of Signet, the United States’ largest jewelry retailer, fell after the company cut its forecasts for sales and profit for the rest of the year.
In a way, the engagement ring has become a glorious microcosm of the American economy. The bridal jewelery business is being hit by the delayed effects of the pandemic, rising inflation which is squeezing consumers and increasing panic among shopkeepers.
Some volatility is purely due to the pandemic. Weddings were canceled during the 2020 lockdown, but resumed in late 2021 and throughout 2022, with more typical patterns expected to return in the coming years. Marriage-related activity shows some early signs of slowing in 2023, but it’s unclear whether this is the result of a 2020 dating dry spell, according to Signet, or a return to a longer shift toward later and fewer marriages. Is.
is that clear? Marriage trends are also tied to broader, and potentially longer-lasting, economic forces. Signet sales may be declining because fewer people are getting down on one knee, but also because ring buyers are becoming more cautious and spending less amid rapid inflation and a heightened sense of direction of the economy. Uncertainty is on the rise. Both the volume and value of jewelry sold by Signet declined in the last quarter.
Ms. Drosos said the company had “expected the low-double-digit decline in operations we saw this quarter,” but other factors were also at play. “Recent economic concerns resulting from low consumer confidence, low tax refunds, regional bank failures and persistent inflation led to a weak trend in spending in the jewelry industry,” he added.
Consumers are facing major challenges this year. Prices, as measured by the Personal Consumption Expenditure Index, have increased by about 15 percent cumulatively over the past three years. Inflation has eased in recent months, but many workers are finding that their wages are falling.
The Federal Reserve is raising interest rates to try to cool the economy and fight stubborn price increases. In addition to making it more expensive for consumers to buy on credit or take out loans, the change in rates has raised the possibility that the economy could slide into recession.
As many families see their savings dwindle and are worried about their job security, they may be less inclined to spend on big-ticket items like fancy diamond rings and bespoke wedding dresses .
Wedding dress retailer David’s Bridal suggested in a bankruptcy filing this year that some brides have become budget conscious.
“An increasing number of brides are choosing less traditional wedding wear, including affordable wedding dresses,” James Marcum, the company’s CEO, said in a statement. court filing,
Like much of the economy, the wedding industry has shown signs of a divide, as higher-income earners find they are better able to access and spend their savings, and lower-income families who spend the bulk of their earnings on necessities such as food Let’s spend under the burden of inflation.
Luxury retail group LVMH, owner of jewelers including Tiffany, told continuous growth in early 2023, including solid jewelry sales.
“Everyone was expecting that 2023 would be a catastrophic year for luxury in the US,” Jean-Jacques Guoni, LVMH’s chief financial officer, told investors in April. “It’s normalizing, but it’s not bad either.”
But at more mass-market brands like K and Zelle’s, shoppers may be starting to hold back.
“We began to see softness at higher price points, previously relatively untouched, and lower price points remain under pressure,” Joanne Hilson, head of finance at Signet, said during Thursday’s call.
Signet is expecting a boom in wedding-ring demand: it’s predicting that there will be 500,000 more engagements from 2024 to 2026 than retrospective trends would suggest, as lockdowns lead to delayed dating matches. But Bank of America analysts “worry that some of that rebound will be offset” by a “pinched consumer” spending less on jewelry, they wrote.
Shane McMurray, founder of Wedding Report, is apprehensive of a big gap year in engagements. He expects marriages to decline by 20 percent in 2023 from 2022 levels as trends normalize. And Lyman Stone, director of research at the consulting firm Demographic Intelligence, agreed that the current downturn in marriages may reflect a return to past trends rather than a one-off weakening.
“It looks like 2023 is going to be a down year,” he said. “I think it’s a bit stressful to blame it on the lockdown in 2020.”
