Kay Jewelers Owner Steps Up Promotions Amid Gem-Swapping Scandalby
Signet’s Mark Light says company is reviewing its process
CEO complains of ‘orchestrated campaign’ by short sellers
Signet Jewelers Ltd., owner of the Kay, Zales and Jared chains, is stepping up store promotions after diamond-swapping allegations tarnished the company’s reputation and dragged down its stock.
To get more customers in the door, Signet is amplifying previously planned discounts, Chief Executive Officer Mark Light said in an interview at Bloomberg’s New York headquarters. Signet is also reviewing the seven-step process the company uses to confirm the authenticity of gemstones.
“There are some promotions that we are doing to stimulate and excite the customers more,” Light said. “There are existing promotions in place and we have planned them, but there are some incremental promotions to make them even stronger.”
Shares of the Hamilton, Bermuda-based jeweler have plummeted more than 20 percent since a May 25 BuzzFeed story spotlighting customer complaints. Shoppers in the report said their diamonds had been unknowingly swapped with cheaper stones when jewelry was brought in for repairs. Signet’s Facebook page also drew complaints from some customers.
Light said the allegations are overblown and that Signet only receives customer complaints 0.2 percent of the time, despite handling 4 million jewelry-service transactions last year. There also hasn’t been a significant increase in complaints since the BuzzFeed story was published, he said. Still, the company is working to contain the crisis, which has largely spread over social media.
“We need to stay on top of it and we need to get this under control,” he said. “We have to make it right and get on top of social media to make sure that the other side of the story is told.”
Signet’s stock also was battered by a negative report this month in James Grant’s influential investment newsletter, which cited a short seller. In addition to mentioning the diamond-swapping controversy, it renewed concerns about Signet using its credit operations to boost sales.
Light said his company has suffered a “targeted attack” by short sellers, who led an “orchestrated campaign” to amplify the controversy.
The BuzzFeed story 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 called moissanite while it was being serviced. Light said he met personally with the customer this week to resolve the matter.
Signet also disappointed investors with a slower sales forecast for this fiscal year. The company said last month that comparable sales growth would be 2 percent to 3.5 percent, down from a previous outlook of as much as 4.5 percent. At the time, the company announced that it’s conducting a strategic evaluation of its credit portfolio.
“We are revisiting all the processes that we have,” Light said on Wednesday. “We wanted to make sure our existing processes are being executed appropriately, and there’s no major gap. But we are not done.”