Signet Jewelers views fashion jewelry as a key area for synthetic diamonds, according to CEO Gina Drosos.
Drosos highlighted fashion jewelry as particularly compelling during the company’s investor call on Thursday following its fiscal first-quarter earnings. She noted a 14% year-on-year increase in revenue from fashion jewelry featuring synthetic diamonds, despite a 6% decline in overall fashion jewelry sales amounting to $552 million, as reported in Signet’s form-10Q.
Over the past five years, Drosos explained, the efficiency of synthetic diamond production has improved, lowering costs. This development has made larger carat options accessible to price-conscious customers who may find natural diamond engagement rings beyond their budget.
Signet has largely maintained its average transaction value (ATV) for synthetic diamonds, while natural diamonds continue to appeal to consumers seeking enduring value, Drosos added.
She sees significant growth potential for lab-created diamonds in the fashion segment, which traditionally has had lower penetration of natural diamonds. “It’s a trade-up opportunity,” she emphasized.
Fashion pieces with synthetic diamonds command more than twice the ATV of other fashion jewelry, offering attractive margins for Signet, Drosos pointed out.
For engagement jewelry, natural diamonds remain the overwhelming choice, whereas synthetic diamonds appeal to customers seeking affordability, Drosos noted.
She highlighted the innovation of offering synthetic diamonds as an option for customers who desire larger and clearer stones than they can afford naturally. Signet continues to provide this choice in both finished products and loose diamonds.
Drosos acknowledged the high cost of using natural diamonds in fashion products at Signet’s price points. Lab-created diamonds allow Signet to add sparkle to these pieces and encourage consumers to upgrade to more expensive and aesthetically appealing items, she explained, also noting healthy margins for the company.
Regarding pricing trends, Drosos mentioned that prices for both natural and synthetic diamonds have decreased. She anticipated further declines in lab-created diamond prices due to their significant availability. However, retail prices have experienced slower declines but remain under pressure, she added.
These insights follow Signet’s collaboration with De Beers on a marketing campaign promoting natural diamonds. Signet’s websites now include a disclaimer about synthetics, cautioning that their relative abundance may not guarantee enduring value.