Kay, Zales, and Jared are hurting after sluggish holiday sales - and it's just the latest sign that millennials are turning the diamond business upside down

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Kay, Zales, and Jared are hurting after sluggish holiday sales - and it's just the latest sign that millennials are turning the diamond business upside down

Kay Jewelers

Nam Y. Huh/AP Images

"Our holiday season performance fell short of our expectations," CEO Virginia Drosos said in a statement to investors.

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  • Kay, Zales, and Jared are all in trouble after a weak holiday season.
  • Signet Jewelers CEO Virginia Drosos recently indicated in a statement that store closures are on the horizon.
  • It's just the latest instance of bad news for the jewelry giant, as millennials are increasingly avoiding diamonds.

Diamonds aren't necessarily millennials' best friends. At the very least, the jewelry-shopping habits of young people are a world away from that of their parents' precious gem preferences.

And that's part of the reason why it was a rough holiday season for jewelry retailers Kay, Zales, and Jared.

Millennials have more options when it comes to glitz, including non-traditional rings and cheaper lab-grown diamonds, which cost 30% to 40% less than their mined counterparts. The Financial Times reported that certain legacy brands like Tiffany & Co. and Cartier have also been more adept at capturing the category of millennials on the lookout for luxe offerings.

While De Beers Chief Financial Officer Nimesh Patel told Business Insider last year that the perception that millennials are saying no to diamonds is a "fallacy," he noted that younger people are increasingly buying the gems for themselves - rather than for loved ones.

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But this likely comes as cold comfort to chain jewelers like Kay, Zales, and Jared. Signet Jewelers, the jewelry giant that owns all three retailers, reported that its same-store sales were down 1.3% for the nine weeks leading up to January 5, 2019.

"Our holiday season performance fell short of our expectations," CEO Virginia Drosos said in a statement to investors on January 17. "Early improvements in refreshed merchandise assortment, digital marketing and OmniChannel were more than offset by larger than expected declines in legacy product lines."

Drosos went onto say that the sluggish holiday sales indicate that Signet must double down on its efforts to "right-size" its store base. This likely means that the future holds store closures for Kay, Zales, and Jared, Fortune reported.

Read more: 'Psychologically scarred' millennials are killing countless industries from napkins to Applebee's - here are the businesses they like the least

A Signet Jewelers spokesperson told Business Insider that the company has not yet announced any store closings or openings for the next fiscal year. The spokesperson said that specific announcements regarding Signet's store base will likely not take place when the company's fiscal year-end results are released on March 14.

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While it's not clear whether or not store closures are imminent, the holiday sales numbers certainly make for gloomy news for the jeweler giant, which is domiciled in Bermuda and headquartered in Akron, Ohio. And it's just the latest in a string of ill tidings for the company.

At the very end of 2018, Gracian Capital short-seller Matthew Kliber called Zales overvalued and predicted that Amazon would ultimately step in and take a bite out of the jeweler's business. Back in November, Signet Jewelers' shares dropped 25% after the company announced a major loss. In 2017, critics cut into the company for its practice of "forcing employees to sign away their right to sue for sexual harassment."

Still, Drosos offered some insight into how Signet Jewelers plans to turn things around.

"We expect to accelerate initiatives to enhance our product assortment, marketing personalization and analytics, promotional effectiveness, service offerings, and e-commerce to deliver a more seamless and engaging omnichannel customer experience," Drosos said.

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