2026.09.24 | GP | Retail | Signet Trade-Up & Diamond Mix

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SIG

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BRLT

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Nordstrom.com

Viewpoint:

Former Executive

Moderator: Raghav Nayar (RN)

| Sep 23, 2026 | 36 Min Read

Bill Brace (BB), Former President of Kay Jewelers - Signet Jewelers

SU MMARY

Overview

The transcript provides a detailed discussion on Signet Jewelers, focusing on its growth outlook, pricing strategies, digital initiatives, and competitive positioning. The conversation includes insights into leadership changes, market dynamics, and strategic objectives, particularly in the context of the jewelry retail sector. The expert shares experiences and observations from their tenure at Signet, highlighting the company's efforts to navigate challenges such as gold price fluctuations and competition in the fashion jewelry segment.

Key Insights

The expert emphasizes the importance of customer-first leadership and the varying approaches of different leaders at Signet. There is a strong focus on the impact of gold prices on pricing strategies and the company's agility in inventory management as a competitive advantage. The expert highlights challenges in the fashion jewelry segment, noting that Signet has been losing market share to competitors with strong value propositions and design appeal. The expert is skeptical about Signet's ability to achieve positive growth in the upcoming quarters, given the current market conditions and internal challenges. The discussion points to the necessity of increasing marketing investments to capture the fashion customer segment effectively.

Competitive Landscape

Company/Product

Positive Aspects

Negative Aspects

Market Positioning

Signet Jewelers

Agile inventory management, strong bridal segment

Losing share in fashion, promotional pressures

Facing challenges in fashion, strong in bridal

Kendra Scott & Brilliant Earth

Strong design and value proposition

Not discussed

Gaining share in fashion jewelry

Independents

Strong personal relationships, trust

Limited digital capabilities

Compete effectively on personal experience

Quantitative Insights

Metric

Insight

2Q Comp Growth

Up 2%, driven by price increases rather than unit growth

Average Unit Retail (AUR) Growth

Up 9%, influenced by mix shift towards higher-priced bridal items

Gold Price Impact

Price increases due to record high gold prices, affecting procurement and pricing strategies

Holiday Quarter Performance

Historically negative, with challenges in fashion segment impacting overall sales

Conclusion

The expert provides a comprehensive analysis of Signet Jewelers' current market position and strategic challenges. The discussion highlights the need for strategic adjustments in product assortment, marketing investments, and digital initiatives to better compete in the evolving jewelry retail landscape. The expert's insights suggest that while there are opportunities for growth, significant challenges remain, particularly in the fashion segment and during key sales periods like the holiday quarter.

RN: Good afternoon. My name is Raghav Nayar with the Consumer Insights Group at Guidepoint Global. This afternoon, we're discussing Signet Jewelers. We plan to address the second half 26 comp growth outlook, AUR and unit growth drivers, digital store closures, and margin initiatives. As a reminder, if you have any questions for the advisor during the call, please email ask@guidepoint.com, and we will try to get your question answered. I am very glad to welcome Bill Brace, who is a former president of Kay Jewelers and Jared at Signet. Bill, thank you for joining us this afternoon. I just want to make sure that you will not speak about any material non-public information, security prices, your investment holdings, or provide any investment recommendations during the teleconference.

BB: That's correct. We won't discuss anything that's not public.

RN: Bill, to start off, please tell us about your background and the various roles you held at Signet.

BB: Yeah, I joined Signet in 2018 after about 30 years at Procter & Gamble. When I joined Signet, I was playing a double-headed role as the president of Jared and then also the chief marketing officer for the company. After a couple years, I took on some additional responsibilities for the services business. And then the last 2 years I was at Signet, I was the president of Kay.

RN: Before we get started, just what are your thoughts on J.K. Symancyk, the brand's transformation strategy, and maybe how his leadership style is similar or different to what you saw with Gina Drosos?

BB: Yeah, you know, I really think highly of JK. He's obviously a very skilled retail CEO. In the time that I worked with him, which was about 5 or 6 months, I guess, in total, he's a very customer-first leader, and he really comes at that with a very strong merchant lens, which is slightly different than what Gina brought. She is also a very customer-first leader, but because of her experience base, she came at it much more from a kind of a branding and a marketing-centric perspective. Focus on customer first. So I think the commonality is customer first, but that slightly different orientation based on their experience does lead to a slightly different focus and set of priorities and just way of thinking about the business.

RN: And then just on recent leadership changes, and I understand that you may not have worked with all these people. Julie Yoakam comes to Signet from Helzberg. So, you know, an industry insider in Zales has a new brand

president from Mattel. Pam Cloud came to Blue Nile from Tiffany or is coming to Blue Nile from Tiffany. What are your thoughts on bringing someone in on these leadership appointments and also bringing someone in from outside the industry in the case of Mattel?

BB: Yeah, I think there's pros and cons to both. I mean, obviously having category expertise is a huge advantage in terms of being able to move maybe a little bit faster in developing strategies for the various brands. At the same time, I came in without any category experience and I like to think that in some ways that outsider perspective and kind of fresh lens on the business can actually be beneficial because you see things differently, you challenge certain things that have just been a certain way for a long time and you're able to challenge some of those assumptions and come up with strategies that can break paradigms and break through in ways that you might not if you didn't have that fresh lens. It's interesting because when I joined the company, when I met with suppliers and vendors, often they are multi- generational businesses, family businesses. And I felt like for the most part, a lot of those people did welcome an outside perspective because they realized that it is a bit of a kind of an old industry and fresh thinking does help.

RN: Great. So just going to the quarter performance, the 2Q comps were up 2%, 9% growth in merch AUR. Kay sales and Jared revenue was up in the singles with units flat. What do you think is driving recent comp growth and how much of this is really like-to-like commodity pricing?

BB: I think when you look at AUR being up, but net sales being down, it is clear that there is some unit erosion. Which then suggests that the majority of what is driving the comp growth on a same store sales basis really is being driven by price increases and the impact of gold reaching record high price per ounce and all that kind of stuff. So that's my read is a lot of it is being driven by, if you will, inflationary kind of factors. So that is one factor. The other factor that I think is evident that's a little bit less evident on the surface is it's clear that there is some mix shift going on that is also enabling that AUR increase. And by that what I mean is they seem to be having some success and more success growing the bridal business which obviously has much higher price points than the fashion business where they're actually losing sales. And so that, with fashion having lower price points and losing share and bridal having higher price points and gaining sales, that mix effect is also one of the factors driving AUR.

RN: And just curious, the average price of gold now is over $4,000 for troy ounces, almost, well, about $900 higher than last year. How quickly does Signet adjust its gold jewelry procurement to market prices? So I guess, the question is, when do they mark to market?

BB: I would step back and just offer the broad perspective that I think this is one of the competitive advantages that Signet has. They are relatively lean and agile on their inventory management versus a lot of their competitors, meaning that the price of gold shows up faster in their products than it does for their competitors, which is great when prices are going down, not so good when prices are going up. That is a structural factor in the way they operate relative to competition. But going back to your direct question, a lot of the price of gold is factored in at the point at which they place their orders. If they had a certain ring that they want to buy, they're going to put an order in on that and then there's a certain amount of time from the time that order is placed to the time it's produced to the time it comes into inventory, and that may be a several-month lag before you actually see that price of gold coming into play in terms of the way the piece is priced in the store.

RN: And then what changes could Signet make to its assortment in the short term if gold prices continue to stay strong? Or what assortment changes have they made in the past?

BB: Sorry, say the question one more time.

RN: Hi, what assortment changes or how could Signet adjust its assortment if they're trying to protect certain price points if gold prices stay strong?

BB: Well, I mean, a big part of it is just the strategy around product design. So they would be trying to do things like what I would call lightweighting product design. So making a ring slightly more narrow in the circumference of the ring... not the ring size, but the ring, the structural part of the ring. There's actually been a lot of innovation; even though gold is obviously much higher now, it's been an issue for some time, even when I was in the business... the cost of gold being an affordability issue. So there's all kinds of innovation that the suppliers have been doing to give gold a bigger look while weighing the same or less. And so it really gets into the detailed design and manufacturing process to achieve some of those design innovations. So it would be things like, if you saw a big oversized hoop earring, looks like a really big chunky piece of gold, but it's actually hollow inside. And some of the innovation techniques and manufacturing practices are aimed at getting the wall and the surface of the gold thinner and thinner while still being structurally rigid and giving that bigger, bolder appearance.

RN: Yes. And just on the holiday quarter, so Signet has not delivered a positive holiday in the last 2 years, even with gold price inflation in terms of comp. What is the problem in the holiday quarter? What has been the issue the last 2 holidays? And BB: Yes.

RN: Is some of this just about promotions, or what is the challenge in capturing sales early on?

BB: It's a great question. I think there are some really telling things that happened in the last quarter that explain both what happened in the past and where things might be headed this holiday. It has everything to do with the fashion business. Q4, over the holiday period, is really driven more by fashion than by bridal. For much of the rest of the year, it's the other way around. What I call fashion purchase is really often a gift for someone. Somebody buys a gift for Christmas or that kind of thing. Obviously, Announcer: And we'll be right back.

BB: Gifting can be self-gifting, people buying for themselves, but in Q4, it's primarily gifts for the holidays. Those are primarily what we call fashion purchases: gold chains, diamond earrings, tennis bracelets, those kind of things. That business has been softer for Signet for some time and it shows up in Q4 in the last quarterly release where sales of fashion was down. Essentially, what it means is they've been losing that fashion customer to some very good competitors like Kendra Scott and Brilliant Earth and some of those that are doing a really good job appealing with a value proposition and really outstanding design in that fashion category. In essence, in my view and in the numbers that they have released, they're losing business in fashion. And when fashion is a bigger proportion of the quarterly sales, it's going to show up as a bigger hurt and a bigger hit.

RN: Do you see either their product strategy or their marketing strategy that would enable them to defend share during the holiday quarter maybe within their fashion business?

BB: I'm sorry, you cut out on the first part of your question. Can you say it one more time?

RN: Sure. Do you see any meaningful change in the strategy, whether it's product or marketing this year that would allow them to defend share in fashion during the holiday quarter?

BB: It is a stated strategic objective in JK's strategy, grow brand love, to grow into adjacencies, which is really the fashion business. They certainly have made some attempts to do that. The recent website redesign, there's no question they are going after the fashion customer as a strategic objective. But the results suggest that it's not been enough. They're still losing share and that's not a new development. It's been happening for 2 or 3 years now. And in my opinion, that goal of growing the fashion business is very achievable. But it's easier said than done because it really does take a concerted effort to restructure the assortment, and bring in a lot more products, especially at some of those lower price points. It takes a real concerted effort in terms of the website and the digital experience because

the way those customers shop is very different than a bridal customer. It's much more self-guided. It's obviously much more driven by style and style inspiration. And it also requires a very different store experience. Again, being more self-guided and more self-exploratory. Those are the areas that I would observe that, while they're taking steps, it obviously hasn't added up to be enough yet. There was also a comment in the earnings announcement that talked about their marketing investment being decreased and that was being referenced as a success, that they've been able to grow comp with lower marketing investment. I think that can be declared a success in some ways. At the same time, I would look at that and wonder whether that is a... whether the strategy and the step to reduce marketing is really going to be helpful in the end to grow that fashion business because it is such a differentiated customer. In other words, I would think that they need to be increasing marketing investment if they really want to be successful growing that customer count and bringing that new incremental customer in.

RN: Promotions were a problem last year because the holiday season seemed to take off slower at Signet. As retailers make price investments or lower prices from their tariff refunds, do you think that Signet could deliver a less promotional fourth quarter this year or is that shopper from last year, if it is the same shopper, looking for the same level of promotion?

BB: My view is it's going to be a tough Q4. And I think there's going to be a lot of pressure on promotion to deliver value, deliver competitive value in an environment that is so inflationary and where prices are increasing, you know, at such a dramatic pace. And again, I would point to what they announced in their latest quarterly earnings announcement. I mean, the fact that fashion is soft, fashion tends to be the most price sensitive category, right? And it happens to be the category within Signet's portfolio that has the most competition in some ways. Both in terms of direct competitors like the Kendra Scotts and the Majuris and those kind, and also, you know, alternatives for other kinds of gifts, whether that be apparel or, you know, alternative categories, which may not be as impacted by, you know, the inflation of gold price and tariff factors and all of that kind of stuff. So the fact that the business is soft going into the quarter suggests that there are going to be even more pointed headwinds as the importance of that business picks up relative to the broader portfolio.

RN: So I guess your view would be that, what would be your view for the rest of the year, then third quarter and fourth quarter, would they be able to get the positive comp based on the drivers and the mix that you had suggested?

BB: I certainly think they could. If the execution goes right, I mean, I don't think there's any, let's say, fundamental reason why they can't grow, but I would say the evidence of what's happened in the business and the things that they are saying about their guide make me a little bit pessimistic. Okay. So again, sorry to be repetitive, but the fact that the fashion business, which is the key driver of Q4, the fact that that is in decline earlier in the year suggests that they have a very short time to turn that around when some of the reasons why that business is soft. Being cost inflation, price inflation, broad value sensitivity in an inflationary environment suggests that's going to be tough. And their own guide suggests that it's going to be tough where they have had net positive same store sales growth to this point in the year. Their guide is something like 0% to 2% on the year, which suggests that they think there's a very real possibility that they're going to have negative comps in Q4.

RN: Excellent.

BB: So can they grow? Yeah, of course. Is it going to be very challenging and more likely that it's a flat to down quarter? I think it is.

RN: Excellent. If we just go to how is the Kay, Zale, and Jared customer, who you were very close to, how do they behave in this environment where you have low unemployment, but cost of living pressures and interest rates are going higher? What do they do?

BB: I mean, at the end of the day, jewelry is a discretionary purchase, right? It is, and it's a high-value, high-cost purchase and very emotionally involved, right? There's no question that the customers are price and value sensitive in these environments. Less so on the bridal side, and usually when somebody's going to get engaged, they have a budget, you know, for that engagement ring, and they spend that budget, which may be a relevant factor on questions about lab-created, and we can come to that if you want to. But for the most part, they have a budget, they spend that budget, and I would expect the bridal business to be more resilient or the most resilient within Signet's portfolio. What could happen and has happened in the past is, you know, in times of high economic uncertainty and high inflation, it does cause people to slow down in the commitment of their relationship. So said differently, we have seen engagements go down in times of difficult economic environment. For the fashion customer, again, they are just, because it is a much more highly discretionary purchase, the behavior plays out in a couple different ways. Either they spend less on jewelry if they decide to buy jewelry, or they tend to category shift into... other categories like apparel. And so I would expect in this environment that non-bridal business is just going to be under a lot more pressure for the foreseeable future.

RN: We'll next go to the unit growth. So units were flat last quarter. Has the business mix structurally changed that Signet is not likely to grow units?

BB: That is what appears to be happening. Because of the AUR differential between bridal and fashion, the reality is fashion drives a lot more units in the business. And so when that part of the business is down, you are going to see a bigger impact to units relative to dollars. So I guess the bottom line is, I think units are going to continue to be challenged until they are able to restore growth in the fashion business.

RN: And do you think—I guess this is more a question around pricing strategy—and we know Signet lowers prices, or sorry, raises prices with commodities inflation. What is their view on lowering prices to drive unit turn?

BB: Obviously there is a lot of focus on that, especially through promotional mechanisms, right? It is no secret that Signet does a lot of promotions across its banners, especially Kay and Zales and Banter. And obviously that is a deliberate strategy to help sharpen the value. I would say that overall, Signet has gotten a lot more sophisticated in how to manage its promotions and optimize its promotions over the last couple of years, which I think is a very positive development for the company. In other words, they are able to reduce promotions where there is less value sensitivity in their line, in their customers and at different times of the year. And then focus the investment on either parts of the line or parts of the year or to certain customers that tend to be more value sensitive. So I would say, yes, they have gotten a lot more sophisticated. Nevertheless, I would expect promotion to continue to play a pretty significant role in creating the right value proposition in the economic environment that we are in.

RN: As president of Kay and Jared, and I know the business mix is quite different, but where did you find that pricing, lower prices could have helped grow share?

BB: I think I saw it primarily as a fashion opportunity because fashion options in earrings, in necklaces, in bracelets, those are the categories where we primarily played in those lower price points. It was also primarily the price segment that was being most affected by competitors and where we were losing the most share, at least in the time that I was at Signet, which appears to have continued, at least in the most recent quarter, based on what they've announced. That said, I think it's a huge opportunity for them to continue to focus on. Fundamentally, there's no reason why they shouldn't be able to grow that segment. But as I said, it does take a very concerted effort across merchandising to have the right assortment that appeals to that customer. It requires the right marketing investment to reach and connect and engage that customer because it is a fundamentally different purchase journey than bridal. And it requires a very different store and digital experience. And so, the question to me isn't so much can they or can't they, it is are they doing the things that are going to be necessary to achieve that goal and the outcome of growing that lower price business.

RN: We'll go to price points. So, Signet has said that $2,000 and over is a mid-single-digit penetration of unit sales and 40% of total dollar revenue. How does that penetrate for Kay, Zales, and Jared?

BB: Obviously, I would expect that to be driven disproportionately by Jared because Jared does have, you know, on average higher AURs and competes for a higher-end customer. Honestly, I'd say kudos to the team for achieving that growth, not only on a dollar basis, but a unit basis. It suggests they are doing a good job of driving that higher-priced, higher-end part of the business. And what I would infer from what they've announced on that success is that it is being driven primarily by growth on their bridal business because that business is primarily driven by price points above $2,000 and they've said their fashion business is down. So I look at it and interpret it as a nice achievement, presumably for the bridal business.

RN: And, you know, with 40% of total dollar revenue, what is a realistic target? Or the question is, how much higher can this mix of business go? And if the opportunity is really at Kay and Zales, or is it more at Jared and Diamonds Direct?

BB: I think it's an opportunity across the board. I think... That maybe one thing to just kind of put out there as a frame for the conversation we've had so far and progressing on this one is, Signet's share of bridal is higher than their share of fashion. At the same time, the share of the business, measured by total category sales, Signet is less than 9% of the total category. So even though they have a relatively developed share of bridal, it's still low in the absolute of the total category. So I always thought about Signet having a tremendous opportunity to grow all of its businesses because at the end of the day, the share is relatively low penetration. So I've always been very optimistic and bullish about Signet being able to have opportunities to grow the business. Again, it comes down to execution and how to go about it in an environment where there's been such an incredible dynamic with lab-created diamonds. Obviously that's a bit of a double-edged sword, and in my observation of the category, there's no question that lab-created is putting some downward pressure on AUR, but that downward pressure is more pronounced at the high end of the market than the low end of the market, which may sound a little bit counterintuitive, so let me explain. The lower end of the market, where Kay and Zales and, frankly, the majority of Signet's sales are sourced, the shopper behavior is primarily one of shopping to a budget for bridal. So instead of going... let's use just illustrative numbers. They may go in with a budget of $2,500 and say, that's what I'm going to spend on my engagement ring. When they go into the store and they see what they can get for that $2,500, it might be a 2 carat lab-created diamond or a 1 carat or less natural diamond. Instead of saying, well, I'm going to spend $1,000 on a 1 carat lab-created diamond, they spend the $2,500 and get the 2 carat, right? And so there's really less trade down, if you will, driven by the disruption of lab-created. It's different on the higher end where a customer that might be shopping for a natural 2 carat and spending, let's say, $10,000 or $12,000. Are they going to spend $10,000 or $12,000 on a lab-created diamond? No, they're probably going to get maybe a 3-carat because they don't want to look ridiculous with a 5-carat diamond on their finger. And so they walk out with a 3-carat for, let's say $5,000, as opposed to spending $10,000 on a 2-carat natural. I hope my example is clear here, but the bottom line is there's less price sensitivity for a brand like Kay or Zales in this environment with lab- created diamonds than there is on the high end at independent jewelers and some of the higher-end stores within Signet.

RN: Okay. Got it. And do the brands have the right assortments to move price points higher, or is there some need for realignment of inventory?

BB: I don't think it's... let's put it this way. I think Signet does a very good job of dynamically managing their inventory and assortment. And in an environment where that higher price customer is more resilient and they are growing, I would have a high degree of confidence that they are going to continue to push into inventory that is more productive and driving AUR. I would be more concerned whether or not they are able to grow their customer base at that high end as fast as they are the assortment. So again, kudos to them because it appears they've been very successful at doing that over the last quarter in particular. But are they laying the right foundation to continue that

trend by investing the right marketing dollars to bring that customer in? Are they creating the right store and digital experience for that more affluent customer in the way they are crafting the experience, the shopping experience, the discovery experience, et cetera, et cetera? So can they get that customer? I really believe they can. I think it's easier on the merchandising front than in the marketing front. And so that would be, you know, to me, the key question to them is what are they doing to continue to grow that customer base at the higher end?

RN: Great. And part of the strategy is to acquire a share from independents. How could Kay, Zales, and Jared compete more effectively with independents who compete at both the mid-tier and also their accessible luxury price point?

BB: Yeah, I tell you what, independents are tough competitors, right? Because in most cases, it's very personal. And often they've got decades, if not generations of trust built up with their customer base. But I always believed the key to beating independents was twofold. It's hard to beat them on store experience. It's hard to beat them on the human experience, even though I think Signet has awesome jewelry consultants. And it's just hard to create a real point of difference there. Where Signet has the opportunity to really create a competitive advantage versus independents is on the digital side of the business where, over the last 5 to 10 years in particular, there's been a dramatic transformation in the way customers educate themselves about jewelry online. There's been a dramatic shift in their behaviors of where they look for design and style inspiration and even style authority. It all starts online now. And I think when I was at Signet, we shared some of the data around how 90% of customers at that time were starting their journey online, but still 75% to 80% of them were still finishing their journey in store. And so that digital funnel, that high-end part of the funnel is critical and it's an area where Signet, because of its sophistication in technology and data and expertise in digital experience, because they're a big company, they just have resources and expertise. And the ability to invest and implement new experiences and new features in that digital funnel that independents can't. And so that to me is one of the primary ways that I think Signet can and should win versus independents. I think the other is on assortment. Signet is very sophisticated in the way it manages its inventory. It is very strategic in the way it creates partnerships with suppliers and the combination of those 2 things enable it to move faster into trends and it has a more desirable assortment in store at any given time. So absolutely, I think Signet has the right to compete and structurally has some competitive advantages that it can and should be asserting to win versus independents.

RN: We'll just go to the credit card programs. How much of a differentiator is the credit card programs and could this help Signet on difficult holiday quarters?

BB: Yeah, credit is a phenomenal tool to close. So when they've got a customer and honestly to the conversation we've been having about affordability and an inflationary environment, credit I think is even more important. And I think Signet has built that into a competitive advantage. I think the most recent announcements about extending the partnership and some of the things that they've been able to achieve in that agreement certainly have brought some financial benefits to the company. They talked about that in the Q2 earnings announcement, presumably. And presumably, it also means that the customer experience is going to be better as well with more resources going into what that customer experience looks like and approval rates and all of those kind of things. So I think credit is huge. It's a competitive advantage for Signet and at no time has it been more critical. That said, it is a closure tool, right? And so the big issue that Signet is facing right now is getting more customers in, especially in fashion, and credit will help once they're in the store, but it's not going to get them in the store. So in other words, credit is important, but it only goes so far to deliver the quarter.

RN: Digital... so Signet has made website improvements, Kay, Zales, and Jared, all 3, and they're now working on, or Blue Nile, I don't know, Blue Nile is maybe a little bit deeper of a change. How does digital play into the omnichannel strategy and is this a high-value customer?

BB: Okay, so there are 2 points to that question. The first is, it's absolutely critical, as I mentioned before, with the vast

majority of customers starting their journey online before they ever go to a store, before they've even decided what store they're going to. So it is, in a lot of ways, the most crucial battleground. And so having that right impression and experience for customers is critical through things like they're doing: a more curated experience, better visualization, things like virtual try-on, virtual consultation, all of those things are really helpful and just can't be understated in terms of how important and foundational they are to growing sales ultimately in store. To the second part of the question, I would explain it by differentiating 2 different customers that we've been talking about. 1 is bridal. So the bridal customer is typically using online as an education tool so that they become versed and fluent in the 4 Cs, the cut, the clarity, the carat, all of that kind of stuff. What are the different styles of diamonds from an emerald cut versus a princess cut versus a round cut or those kind of things, and they're gauging value. So they're understanding, what am I going to get for my budget and all that kind of stuff. But then the vast majority of those people ultimately go in store because as good as the digital experience is getting in terms of visualization and up close magnification of diamonds, there's still no substitute for seeing it in store and customers are still really craving that human experience being able to talk with a person about the purchase, the different considerations, and they're looking to finish their journey in store. For the fashion consumers, especially at the lower end, a much bigger percentage of them finalize their purchase online and make that purchase online. I couldn't tell you what the percentage is, but it's a much higher percentage because it's a less financially consequential decision. And a lot of, especially at those lower price points, it is almost seen like a fashion, like an apparel kind of decision where, obviously, customers have gotten a lot more comfortable making online purchases, and that translates over into those lower price points of jewelry as well. So I would argue in some ways it's even more important to have the right digital experience and think about the competitive set and the way they are putting together a holistic digital experience that starts and includes a heavy aspect of social media and social marketing tied into then the website experience, et cetera, et cetera. So on some level, it's very similar and equally critical, but I would say even more critical at those lower price points to have a differentiated, highly inspirational, highly visual, highly interactive, highly self-exploratory kind of purchase decision that can be very easily finished and closed online.

RN: Got it. We'll go to Blue Nile. Just wondering, sales are under pressure and sales growth has always been an issue for this business even when it was standalone. And I'm wondering... How can Blue Nile re-accelerate growth in engagement and non-engagement?

BB: So obviously that is a question that, let's say the successful answer to that question has been very elusive for the company ever since it bought Blue Nile. I would say clearly the integration of Blue Nile with James Allen struggled to find independent swim lanes, if you will, that could keep each of those businesses. Competing for an incremental as opposed to an overlapping customer. Given some of the things that have now happened, that has become less of an issue. But the problem that those digital pure plays have always had has been twofold. And the first, in a lot of ways, is the most strategic, which is the cost to compete for that bridal purchase is very high, right? And so they have to spend a lot of money to get that customer to come in and make the bridal purchase. So most people, they only make 1 bridal purchase in their lifetime, right? And so unless you can create that, make that a really profitable customer acquisition investment, the only way to make money then is to translate that initial purchase into an additional purchase down the road through romantic gifting like anniversary purchase, holiday gifting purchase, all of that kind of stuff. And it's pretty clear that they have not been able to do either 1 of those things very well. Acquisition cost is high, so they've struggled to invest in a way that is profitable and still competitive, and they've struggled to translate the customer base that they have into incremental customers that drive lifetime value. Those are the 2 primary reasons why, in addition to whatever mistakes were made in the integration, those are the 2 primary reasons that I think... That business has struggled. The other one is in part the inherent nature of being online, focused on digital sales only. I mean, Blue Nile does have some retail stores or did have some retail stores. And as I mentioned, the vast majority of customers want to finish their purchase in-store. So if you don't have that capability, you're inherently limiting the customer base that you appeal to. So I guess it's really those 3 factors that I think are at the base and the foundation of Blue Nile and James Allen's struggles.

RN: Great. We'll just go to Clear Cut. Is this the right move to accelerate high-value engagement sales online?

BB: I think it's definitely a step in the right direction. I mean, from the numbers they've reported, it's a service to a very high-end customer, so it helps drive that premium customer that they want to build. I think it in part helps address some of the issues that I just talked about that are fundamentally limiters of a digital-only business. By bringing human... a human relationship, a human connection, and human advice into the sale so it's not digital-only. So in that way, I think it absolutely is a step in the right direction. The question to me is how scalable is it? Okay, it seems to be a very high-end business. And the other thing is how different is it really than some of the things that have already been done in the business? I mean, Signet and Kay and Jared have had virtual consultation where if you're on the website, you can get a live person at the push of a button for either a phone call or a chat within a matter of seconds. And so how different is the experience with Clear Cut? On some level, I would say it's not really that different. The only thing that really is different is they're bringing a model that's been proven on some level to really draw in a customer that's willing to spend $30,000.

RN: Okay, we'll go to store closures, and I know that's not part of the agenda, but it's an important part of the story. Which malls here are the Signet closing locations, and which banners do you think require more door closures to get their footprint to where they want it to be?

BB: So, when I was at Signet, it was a continuous process. We were always looking at underperforming stores and closing underperforming doors. Obviously, that's at the lower quality end of the malls, it's more pronounced in B and C level doors. And contrary to some of the broad headlines that you see about malls being dead, in my experience, that's absolutely not the case. There are some really good and productive malls out there, but it's also clear that Signet, for a number of years, has been moving to more off-mall locations. I don't know what their publicly announced percentages are, but it's grown to be a significantly more off-mall kind of business. And I would say that is going to continue to play out and therefore we're going to see more store closures among those brands and banners that have more mall stores as a percentage of their door count than off-mall stores. And I just don't know what's been publicly announced there, so I don't want to speculate more on that, but hopefully that gives you a flavor of where their publicly announced direction lies and how to think about it to the extent that you're able to get more information on.

RN: What the current composition of their doors is across mall and off mall. Got it. Just centralized diamond sourcing. How much more can product margin or merch margin improve from centralized diamond buying? And where could a shared diamond inventory be the greatest benefit?

BB: I would say it's clearly an opportunity. I don't think it's by any means the biggest opportunity, even within sourcing, because to a large degree, Signet always had a centralized diamond sourcing operation, in my experience. That wasn't necessarily 100% true, but by and large, it was managed by a very small team of people who were buying most of the diamonds, at least for engagement and loose diamond buying purposes. The bigger opportunity in my opinion has been on buying finished goods. That is an area where the buying has been a lot more fragmented and independent across the banners. Each banner has got their own merchandising team and goes to market and works with suppliers largely independently and obviously is paying a markup for the middleman that doesn't exist in the same way in loose diamonds because loose diamonds are effectively a commodity and the market prices them. And yes, scale matters, but it's much less of a, let's say, an arbitrage opportunity versus finished pieces, which have the additional markup of, in some cases, a couple different steps in the supply chain, manufacturing, etc. So if I were... you've got to call out the biggest opportunity for sourcing savings is in those finished pieces.

RN: Great.

BB: Does that make sense how I'm distinguishing between finished pieces and loose diamonds?

RN: Yes. We'll just finish with lab-grown. So some of the trade associations are pushing for lab-grown to be reclassified as synthetic. What do you think happens to demand if that does take place and what is the impact to margin?

BB: I don't think it's going to make any difference to 99.5% of customers, what you call it. If you call it lab-created, you call it lab-grown, you call it synthetic. Customers are smart and savvy and they look at the value differential. And it is so striking that's why the percentage of lab-grown has grown and grown and will continue, in my opinion, to grow to be a vast majority of engagement ring sales. You know, I've spent time with customers before and after I left Signet and people who are in the engagement market and you have this conversation about lab-created, they really don't care.

RN: Thank you for joining us.

BB: The product and the value differential is so pronounced that it's impossible to ignore and in some cases, you know, whether you call it synthetic or lab-created, it's just semantics and it doesn't make a difference to those customers.

RN: Great. Bill, thank you so much for joining us this afternoon. It was a great call, and I hope to connect again in the near future on Signet.

BB: All right. My pleasure. Thanks very much. Bye-bye. All right. Bye.

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