CEO: Diamond-swapping allegations against Signet are 'absurd'

Signet CEO defends his jewelry company
Signet CEO defends his jewelry company

The diamond-swapping allegations against Signet Jewelers are "absurd," according to CEO Mark Light.

Customers allege that Signet brands such as Kay Jewelers have swapped out diamonds for lower quality stones and returned rings that didn't belong to them. Signet's stock has been under pressure, dropping more than 22 percent, since reports first surfaced in late May.

"We're the largest diamond retailer in the world. We got there by understanding that trust is the most important characteristic when someone is buying jewelry," Light told CNBC's "Closing Bell" on Tuesday. He added that he's been in the jewelry business for more than 30 years.

Light argued that the rate of complaints on repairs is "negligible."

"We do millions of customer repairs and internal services, millions of them. I just had our people do an analysis [of] how many customer complaints we've had over the last year alone, and it's 0.2 percent complaints about our repairs — and that's way too much for me," Light said.

There are, however, other concerns weighing on the company as Signet's stock has fallen more than 32 percent in 2016. Earlier this month, contrarian investor Jim Grant said that the "evidence of trouble" within Signet is that the company "sells roughly 60 percent of its jewelry on credit."

Light, however, is confident in Signet's business model, saying that it's actually a competitive advantage.

Signet's model has tapped into the psychology of its customers and how they "act differently" when they buy jewelry, according to Light.