Aftershocks from the coronavirus pandemic continue to rumble across the U.S. economy, and Signet Jewelers shared a surprising one this week: The company is selling fewer engagement rings this year because, it says, singles who were stuck at home during lockdowns failed to meet their would-be fianc\u00e9s in 2020.<\/p>\n
\u201cAs we predicted, there were fewer engagements in the quarter resulting from Covid\u2019s disruption of dating three years ago,\u201d Virginia C. Drosos, the chief executive at Signet, which owns Kay Jewelers and Zales, told investors on Thursday. Shares of Signet, the largest jewelry retailer in the United States, tumbled after the company cut its forecasts for sales and profit for the rest of the year.<\/p>\n
In a way, the engagement ring has become a sparkly microcosm of the American economy. The bridal jewelry business is being buffeted by the delayed effects of the pandemic, rapid inflation that is squeezing consumers and a growing sense of nervousness among shoppers.<\/p>\n
Some of the volatility is owed purely to the pandemic. Weddings were canceled in droves during 2020 lockdowns, but bounced back starting in late 2021 and throughout 2022, and were expected to level off over the coming years as more typical patterns returned. Wedding-related activity does appear to show some early signs of slowing in 2023, but it is unclear whether that\u2019s the result of a 2020 dating dry spell, per Signet, or simply a return to the longstanding shift toward later and fewer marriages.<\/p>\n
What is clear? Wedding trends are also tied to broader, and potentially longer-lasting, economic forces. Signet may be selling less because fewer people are getting down on one knee, but also because ring shoppers are becoming more cautious and spending less amid rapid inflation and rising uncertainty about the direction of the economy. Both the volume and value of jewelry sold by Signet last quarter declined.<\/p>\n
Ms. Drosos said that the company had \u201cexpected the low-double-digit decline in engagements that we saw this quarter,\u201d but that other factors were also at play. \u201cRecent consumer confidence, lower tax refunds, economic concerns triggered by regional bank failures and continued inflation led to a weakening trend in spending across the jewelry industry,\u201d she added.<\/p>\n
Consumers are contending with big challenges this year. Prices have climbed about 15 percent cumulatively over the past three years, as measured by the Personal Consumption Expenditures index. Inflation has slowed in recent months, but many workers are finding that their wages are falling behind.<\/p>\n
The Federal Reserve has been raising interest rates to try to cool the economy and fight the stubborn price increases. Besides making it more expensive for consumers to shop on credit or take out loans, the rate moves have increased the chance that the economy might tip into a recession. That uncertainty has been compounded by recent turmoil in the banking industry.<\/p>\n
As many households watch their savings dwindle and worry about their job security in a weakening economy, they may be less willing to spend a lot on big-ticket items like fancy diamond rings and bespoke wedding dresses.<\/p>\n
David\u2019s Bridal, the wedding dress retailer, suggested in a bankruptcy filing this year that some brides had become increasingly budget-conscious.<\/p>\n
An \u201cincreasing number of brides are opting for less-traditional wedding attire, including thrift wedding dresses,\u201d James Marcum, the company\u2019s chief executive, said in a court filing.<\/p>\n
Like much of the economy, the wedding industry has shown signs of a split, as higher earners find that they are able to reach into their savings and keep spending, and lower-income families that spend a bigger share of their earnings on necessities like food begin to crack under the weight of inflation.<\/p>\n
LVMH, the luxury retail group that owns jewelers including Tiffany, reported continued growth in early 2023, including solid growth in jewelry.<\/p>\n
\u201cEverybody was expecting 2023 to be a horrendous year for luxury in the U.S.,\u201d Jean-Jacques Guiony, LVMH\u2019s chief financial officer, told investors in April, explaining that a collapse had not materialized. \u201cIt\u2019s normalizing, but it\u2019s not bad, either.\u201d<\/p>\n
But at more mass-market brands like Kay Jewelers and Zales, shoppers may be starting to pull back.<\/p>\n
\u201cWe began to see softening at higher price points, which previously had been relatively insulated, and lower price points remained under pressure,\u201d Joan Hilson, Signet\u2019s finance chief, said during Thursday\u2019s call.<\/p>\n
Signet is hoping wedding-ring demand will bounce back: It is predicting 500,000 more engagements in the United States from 2024 to 2026 than the prepandemic trend would suggest, as dating delayed by the lockdowns leads to matches.<\/p>\n
But Shane McMurray, founder of the Wedding Report, is skeptical of a big gap year in engagements. He expects weddings to fall 20 percent in 2023 from 2022 levels as trends return to normal. And Lyman Stone, director of research at the consulting firm Demographic Intelligence, agreed that the current slowdown in weddings might reflect a return to previous trends rather than a one-off weakening.<\/p>\n
\u201cIt does look like 2023 is going to be a low year,\u201d he said. \u201cI do think that placing the blame for that on lockdowns in 2020 is a little bit strained.\u201d<\/p>\n