Signet Jewelers the operator of Jared, Kay and Zales said it strongly objected to the allegations.
Signet Jewelers shares dropped on Friday reaching a weeklong drop of 12% amidst reports that have questioned its customers’ credit quality and alleged that some employees at Signet replaced premium diamonds with less expensive substitutes that were manmade.
In a prepared statement released Friday, the jeweler said it strongly objects to the recent allegations that have appeared on social media that claimed the company members had systematically mishandled jewelry repairs of customers or engaged in swapping diamonds.
Signet is the owner of some of the most prominent brands of jewelry stores across the U.S. including Zales, Kay and Jared Jewelers.
Like other big ticket item sellers, Signet often times provides its own financing for purchases made by its customers.
Following the close of the stock market on Wednesday, a long running newsletter about investment known as “Grant’s Interest Rate Observer,” issued a report that was negative on Signet calling its credit portfolio in worse shape that had been thought due to the way it accounts for delinquencies on loans and losses.
On Thursday, shares of Signet dropped 6.6% following the late Wednesday report.
The newsletter using data from an international business daily said many filings of bankruptcy citing the different brands of Signet as one creditor had increased by 72% over the first three months of 2016 in comparison to the same period in 2015.
Last week, prior to the release of the newsletter, Signet announced that it would be undergoing an evaluation related to strategy of its portfolio of credits and would be considering a complete range of different possible outcomes, including the outsourcing of its credits.
The company also said it hired Goldman Sachs as a new adviser, though it did note that its credit metrics for the most recent quarter improved.
Along with that disclosure, Signet reported downbeat growth in comparable store sales.
Signet did not respond to requests for a comment regarding the allegations of credit quality, though CEO Mark Light on an earnings calls last week said the company’s credit metrics and its credit portfolio were strong.
The newsletter cited as well posts on social media that alleged that some of the employees at Signet had swapped out premium diamonds for ones that were mad made, when the customers had returned the product in for repairs or an inspection.
Shares of Signet dropped 4.5% in trading Friday afternoon.
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