NEW YORK (TheStreet) -- Signet Jewelers (SIG) - Get Report plans to test new gem authenticity technology at many of the Bermuda-based jewelry retailer's Kay Jewelers locations beginning in the fourth quarter.
The decision comes after the company faced allegations in May that they were engaging in "diamond swapping." Customers complained that employees switched out gems for lower-quality stones, Bloomberg reports.
Signet CEO Mark Light said in a conference call this afternoon that the company will keep track of each diamond's "unique marks" on a digital screen.
"So we believe by putting this new technology in place in our stores that we are enhancing and creating even more transparency for our customers and it will be a huge competitive advantage for us into the future," Light noted.
The company currently has a multi-step process wherein a gem is inspected by several people, then tested in front of the customer to confirm they're receiving what they requested, he added.
Signet sustained $5 million in expenses from consulting and related costs as a result of the diamond-swapping claims, according to MarketWatch. Light said it's unclear whether the claims impacted sales.
Shares of Signet were tumbling 12.23% to $83.82 on heavy trading volume mid-afternoon Thursday following the company's lower-than-expected second quarter results.
About 7.59 million of Signet's shares have changed hands so far today vs. its average volume of 1.31 million shares per day.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate SIGNET JEWELERS LTD as a Buy with a ratings score of B-. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
You can view the full analysis from the report here: SIG