Signet Drops After Grant’s Investment Newsletter Sparks Concernsby
Report stokes fears of a possible gem-swapping scandal
Newsletter also renews criticism of Signet’s credit business
Signet Jewelers Ltd. shares dropped as much as 14 percent after James Grant’s investment newsletter took a critical view of the company and sparked fears about a possible gem-swapping scandal.
Saying it was bearish on Signet, the report raised concerns about the jeweler’s credit operations, a longstanding source of criticism for the chain. The newsletter also mentioned a BuzzFeed story about customers complaining that their diamonds had been unknowingly replaced with lesser-quality gems.
Signet, which runs about 3,600 stores under such brands as Kay, Zales and Jared, has drawn controversy for using credit to bolster sales. Critics say that Akron, Ohio-based Signet was becoming more of a finance company than a jewelry chain, increasing its risks in the process. The BuzzFeed story, meanwhile, focused on a Maryland woman who said her $4,299.99 engagement ring -- purchased at a Kay Jewelers -- had its diamond swapped out for a manmade stone.
The stock fell as low as $84.80 after word of the report first surfaced. The shares later pared their losses, trading down 6.2 percent at $92.63 as of 10:41 a.m. in New York.
The company didn’t immediately respond to requests for comment.