Joshua Freedman's Key Points • Lab-created diamonds are increasingly accepted in fashion jewellery, shifting consumer perceptions. • Retailers are differentiating between everyday lab-created pieces and natural diamonds for milestone, luxury-focused purchases. • Demand for smaller natural diamonds is weakening, while lab-created diamond prices are encouraging broader consumption. |
One of the most common debates in the diamond market is whether or not lab-created diamonds are reaching their resting pointin the lower-cost and lower-emotion sphere.
While previously lab-created diamonds stole market share from natural diamond engagement rings, the situation with one particularly prominent US retailer, Signet Jewelers, appears to indicate that lab-created diamonds are very much… in fashion.
Take the company’s second fiscal quarter as an example. The largest retailer of diamond jewellery in the US reported better results than it expected for the three months that ended 2 August.
Sales increased by 3 per cent year-on-year to $USD1.54 billion, while same-store sales increased 2 per cent.
Operating profit came to $USD2.8 million, compared with a loss of $USD100.9 million
a year earlier.
With that said, Signet still incurred a net loss of $USD9.1 million; however, this was down
from the past year’s deficit of $USD98.5 million.
At the time of writing, its share price had gained around 40 per cent in the past six months.
Recipe for success
Central to this success has been a shift toward lab-created diamonds in fashion jewellery.
Fashion jewellery overall saw a 2 per cent increase in same-store sales for the quarter. Joan Hilson, the company’s chief financial and operating officer, said these figures were driven by performance at key gifting price points.
The average product selling price, also known as average unit retail (AUR), increased 12 per cent
in fashion, compared with 4 per cent in bridal.
Lab-created diamond fashion pieces carry a threefold AUR premium over other fashion jewellery, Hilson elaborated.
Synthetics expanded to 14 per cent of fashion sales for the quarter — double what they were a year earlier.
Signet CEO J.K. Symancyk explained that fashion jewellery was important given the category’s size and suggested that the company was focused specifically on expanding its assortment of lab created diamond jewellery.
The emphasis on ‘everyday wear’ is a central plank of the company’s ‘Grown Brand Love’ strategy, which was introduced by Symancyk after the departure of Virginia Drosos in November 2024.
The strategy was described as an effort to reorganise the company’s key brands, which include Blue Nile, James Allen, Zales, and Kay.
The brands would be refocused into four distinct customer categories: milestone and romantic gifting, style and trend, inspired luxury, and digital ‘pure play’.
As part of a broader corporate strategy, increased emphasis on fashion jewellery, a significant reduction in Signet’s senior leadership, and the closure of around 150 stores would be priorities.
The company also suggested that a clearer distinction between natural and lab-created diamond products would be critical.
It has also been reported that Signet lacked the inventory needed to meet strong demand
for lab-created diamond fashion jewellery during the 2024 holiday season.
It has since tripled its ownership of pieces below $USD1,000 in that category, especially under $USD500 and with a particular focus on $USD250 to $USD500, Symancyk revealed.
The invisible bridal boom
Signet has faced many challenges over the years, from difficulties embedding its acquisitions
to a highly volatile share price.
One of its most significant problems since COVID-19 was its reliance on an expected post-pandemic engagement boom, which did not fully materialise.
Bridal sales slid 8 per cent to $USD2.87 billion in the most recent full fiscal year, which ended 1 February 2025.
Going big on sub-$USD400 lab-created diamond pendants in sterling silver makes the business less seasonal and not as reliant on bridal and pricing trends.
It also gets Signet’s brands onto more necks, fingers and wrists without ‘eating the lunch’ of natural diamonds, according to Symancyk. He described it as an expansion of overall consumption. Despite what Symancyk said, natural diamond suppliers are feeling a sharp pinch from the lack of demand for small stones that feed into fashion jewellery.
The major US retailers, including Signet, purchased less and later than usual for the holiday season.
This is partly because of uncertainty over tariffs; however, it’s also because they have less
demand for natural diamonds in that size.
If it ain’t broke...
This is not to suggest that Signet is abandoning the engagement jewellery segment.
Bridal same-store sales were flat in the second fiscal quarter, with ‘positive signs’ ahead of the holiday. The company has upgraded its bridal assortment to support AUR.
Prices of lab-created diamonds have stabilised, while some natural goods have gone up in price, it reported.
The company continues to collaborate with the De Beers Group on a promotional campaign for the mined product, targeting couples that are about to get engaged. This includes the ‘Worth The Wait’ marketing campaign launched in October 2024.
A company spokesperson explained that natural diamonds are rare and unique and tend to keep their value over time. By extension, when it comes to celebrating milestone moments, natural diamonds remain the preferred product among consumers.
Hilson has publicly confirmed that penetration of lab-created diamonds into the company’s engagement business has increased year-on-year.
The category accounted for 40 per cent of its bridal business this year, while in fashion, penetration doubled to 15 per cent, she said in December.
With that said, based on the overall tone of Signet’s messages, it wants to further differentiate its engagement and fashion segments by using different materials. So far, this appears to be working.
What did we learn?
 |
| Blue Nile |
When discussing the figures outlined in this report, Rapaport Group CEO Dan Mano has identified a clear trend.
Lab-created diamonds are delivering stronger short-term profitability, with lower cost of goods sold acting almost like an engagement-season gift straight to the bottom line.
“The open question — for the entire industry — is how the continued decline in synthetic prices may influence long-term customer spending patterns, and whether average basket sizes could be harder to lift in the future once they shift downward,” Mano suggests.
This is also why Rapaport has maintained its long-standing position of not pricing or promoting lab-created diamonds.
They are not scarce and do not preserve value, and while the short-term benefits are evident,
we believe it’s important to consider the long-term implications for retailers and consumers alike.
THE GREAT DIAMOND DEBATE III
Table of Contents
The Great Diamond Debate Collection