According to Forbes, Signet Jewelers—the parent company of Kay Jewelers, Zales, and Jared—raised its full-year sales guidance to between $6.7 and $6.83 billion after a strong third quarter. Same-store sales for those three big brands grew by 6% in Q3, which ended November 1, with total company sales hitting $1.4 billion. The CEO cited a “balanced diamond assortment strategy” and stabilization in diamond prices as drivers. Crucially, the growing popularity of lab-grown diamonds (LGDs) is encouraging customers to trade up to larger stones, especially in fashion jewelry, lifting average unit retail prices. Despite a cautious start to the vital fourth quarter, the company sees LGDs as a major growth engine for the holiday season.
The Trade-Up Game
Here’s the thing about lab-grown diamonds: they’ve gone from a scary, deflationary force for jewelers to a brilliant marketing tool. The data from Jefferies analyst Randal Konik is pretty telling. The retail price gap between a one-carat and a two-carat LGD piece at Signet is minimal—like $886 vs. $1,025. So what does a customer do when they see that? They go for the bigger rock, obviously. It’s a classic trade-up strategy, and it’s working. Signet’s average unit retail (AUR) for fashion jewelry jumped 8% in the quarter, and for LGD fashion pieces specifically, it was up 12%.
And the crazy part? Signet is holding retail prices fairly steady even while the wholesale cost of the stones themselves has plummeted by about 90% since 2019. That’s margin magic. They’re not just selling a cheaper alternative; they’re using the affordability of the raw material to sell a more expensive final product. It’s a complete flip of the script.
Fashion vs. Bridal Battle
Now, LGDs already have a huge footprint in bridal, making up about 40% of Signet’s sales in that category. But that share has stabilized. The real, untapped frontier is fashion jewelry. Penetration there more than doubled year-over-year in Q3, from 7% to 15%. That’s where the massive market share opportunity lies.
Think about it. Jefferies estimates Signet has a dominant 28% share of the $10 billion bridal market. But in the much larger $53 billion fashion jewelry market? They only have about 6%. Fashion jewelry is purchased more frequently than an engagement ring. It’s for gifting, for self-purchase, for holidays. By pushing LGD pieces in key price points under $500 and under $1,000, Signet is aiming straight at the heart of that market. This isn’t just about replacing a natural diamond; it’s about convincing someone to buy a diamond-studded fashion piece instead of a plain gold necklace or some other gemstone item.
Cautious Optimism for the Holidays
So, is everything perfect? Not quite. The CEO admitted November started slow and the Thanksgiving-to-Cyber Monday stretch was “relatively weak.” Consumer confidence is wobbly, which could hit their more value-oriented brands. The entire fourth-quarter bet is on a last-minute surge in the ten days before Christmas, which is their historical pattern.
But even with that near-term caution, the long-term strategy looks solid. LGDs went from a headwind to a tailwind. They’re allowing Signet to premiumize its assortment in a way that resonates with customers looking for value—which, in this economy, is pretty much everyone. The analyst conclusion is stark: this shift positions Signet to outpace the overall jewelry market growth for years. They’re not just surviving the LGD disruption; they’ve weaponized it. You can see more on their investor relations page at signetjewelers.com.
The Bigger Picture
What does this mean for the industry? Signet’s success is a blueprint for other retailers facing similar technological disruptions. It’s about controlling the narrative. Instead of racing to the bottom on price, they’ve created a new value tier that expands the market. The losers here might be traditional jewelers who dismiss LGDs or can’t execute this trade-up strategy, and maybe the makers of non-diamond fashion jewelry who now face stiffer competition.
Basically, Signet found a way to make cheaper inputs lead to more expensive receipts. In a retail world that’s often about discounting, that’s a neat trick. The question is, how long can they keep it up before the “bigger for less” allure of LGDs becomes the expected norm and the trade-up power fades? For now, though, it’s giving Kay and Zales a much-needed sparkle.
