Few luxury items have been as tarnished as jewelry during the economic downturn. Deep quarterly losses posted by Zale Corp. and Signet Jewelers Ltd. Tuesday underscored how even midtier purveyors of wedding rings and diamond heart pendants are feeling the vise-like pinch of a consumer pullback.

Sales at both Zale and Signet plummeted in the last seven weeks of the quarter as shoppers shunned discretionary purchases in the wake of Wall Street turmoil, tightening credit and increasing job losses.
Zale Chief Executive Neal Goldberg predicted ""this holiday season will be one of the most challenging in decades.""
Despite efforts to control costs, reduce inventory and revamp its product offering, the jewelry chain based in Irving, Texas, withdrew its fiscal 2009 outlook as business continued to deteriorate in November. The operator of Zale Jewelers and Piercing Pagoda kiosks in August had forecast earnings of $1.10 to $1.25 a share for the fiscal year ending in July.
New York Stock Exchange composite trading, Zale's shares fell 41% to $5.38, as many other retailers saw their shares rise amid news that the Federal Reserve committed hundreds of billions to revive the stalled lending market, including credit-card loans.
Signet, based in the United Kingdom, echoed Zale's sentiments about the challenging economy in the U.S. and abroad. The ""results for the year will depend on the very important holiday trading season, the vast majority of which is still ahead of us,"" Chief Executive Terry Burman said.
The largest U.S. chain jeweler based on sales, Signet operates Kay Jewelers stores and the pricier Jared the Galleria of Jewelry in the U.S. and recently moved its primary listing to the New York Stock Exchange. Its shares fell 6.4% to $8.49 Tuesday.
While sales and profits in the quarter preceding the holidays are typically the weakest for jewelry retailers, results at Zale and Signet were also hurt by going-out-of-business sales at Whitehall Jewelers Holdings and Friedman's Inc., which are in bankruptcy-court proceedings.
(Source: WSJ)