Summer time for the jewelry industry is like a sleeping beauty that awaits the kiss of autumn jewelry shows in Hong Kong, Bangkok and London to wake up to the selling season. Summer trade in jewelry stores is fading - buyers in this period are more interested in holidays by the sea closer to nature than in going shopping at malls. Some jewelers even take time out and temporarily close their stores.
On July 31, there came performance reports from several major companies operating in the U.S. jewelry market, including Zale Corporation, Signet Jewelers, Tiffany, Movado, etc. These data provide a profile of the market and reflect the mood prevailing among consumers.
Zale Corporation reported an increase in sales at its stores by 5.6 %, while sales at the company’s branded stores (Zales Jewelers and Zales Outlet) and Gordon's Jewelers went up by 7.2 %.
Zale Corporation saw its first money-making year since 2008 posting a profit of $ 10 million in the fiscal year of 2013. However, the strategy pursued by the company remains cautious and Zale plans to close from 50 to 55 stores in the next year.
“We continue to take a conservative view of market conditions both in the U.S. and in Canada,” CFO Thomas A. Haubenstricker said during a conference call.
The Movado Company operating in the U.S. through its own network of watch stores boosted its sales by 17% to more than $ 138 million in the second quarter.
Higher U.S. sales were also posted by Signet Jewelers. In the second quarter of 2014 ended July 31, its sales reached more than $ 741 million, which is 5.6 % higher compared with the second quarter of the previous year.
"We delivered solid second quarter results as expected,” Mike Barnes, Chief Executive Officer, commented.
He stressed that the increase in sales was particularly high in the segment of wedding jewelry, colored diamonds and watches. The Kay and Jared branded stores registered both an increase in the number of transactions and in the average purchase price.
Perhaps the most impressive result in the second quarter was the growth of online sales by 36% posted by Signet. Its U.S. online sales exceeded $ 25 million, an increase of nearly $ 7 million over the same period last year. Barnes also said that 40% of customers came to the company's websites through mobile devices: smartphones, tablets, etc.
However, U.S. sales of Tiffany & Co, which also announced quarterly results, were rather dull. The jeweler’s overall sales in the Americas region increased by only 2% in the second quarter, totaling $ 444 million. Comparable store sales remained flat, that is they did not go up (or were slightly down) in the second quarter and rose 1% in the half only due to higher sales in Tiffany's New York flagship store.
Tiffany’s management said they remained satisfied with the results of the second quarter across all regions except the Americas, where sales were still soft. However, strong sales in China, as well as lowered prices for diamonds and gold allowed the company to demonstrate an increase in net income by 16%, which reached $ 107 million.
According to industry analysts, consumers are still reluctant to spend money on purchases and buy only necessary items. The unemployment rate remains high, wages are not rising, while payroll taxes turn to be higher - all this keeps consumers in a cautious state.
NRF's chief economist, Jack Kleinhenz, said, “Spending has stalled and the economy is stuck in neutral. Even with modest employment gains and steady consumer confidence, Americans remain in a cautiously-positive spending pattern.”
In such an economy, companies operating in the segment of jewelry and accessories less demanding to the purse are feeling better. For instance, Pandora, a Danish jewelry company, known for its line of silver bracelets and beads, has shown excellent results in the U.S. market in the second quarter. Its sales increased by 54% in the U.S.
We expect jewelry trade to reanimate in September gradually intensifying sales from October to December, when jewelers will revamp their inventories for the holidays and consumers will go shopping.
Olga Patseva, Editor in Chief of the American Bureau, Rough&Polished
