In July and August, many participants of the jewellery sector (both manufacturers and sellers) published half-year results of their operations. However, accounts published in mass media cannot be treated as representational in most cases.
First, published accounts, with some minor exceptions, contain consolidated data on groups of companies possessing this or that deluxe brand without detailed breakdown.
Second, such accounts as a rule look like representing achievements of the company in the best possible way rather than reflecting the actual state of affairs.
Finally, accounts of retail sales networks fail to represent jewellery as a separate class of goods.
International Richemont Group, whose members are such well-known manufacturers as Cartier and Van Cleef & Arpels, presented data stating that its sales had grown by 9 % as compared with the same period of the last year and amounted to Euro 1.268 bn.
6 per cent growth was recorded in jewellery (Euro 638 m compared with Euro 604 m in 2006). (Cartier data are not available).
Sales of watches increased by 18 % and amounted to Euro 367 m.
The highest rise of sales was recorded in the Asia-Pacific Region, where they grew by 20 %. The growth amounted to 13 % in the European market, which is the largest market for the group. Figures did not practically change in America – the growth amounted only to 3 %. The only market with a decrease recorded was Japan – sales reduced by 7 % due to the exchange rate fluctuations. Based on the fixed exchange rate, sales have increased by 5 % there. Sales of jewellery and watches of brands belonging to LVMH Moet Hennessy Louis Vuitton (LVMH) increased by 17 % and amounted to 458 m. dollars in 2007.
LVMH recorded good performance of TAG Heuer, Dior and Zenith watch brands and reported on success of De Beers in the American and Asian markets (no figures available). In general, revenues of the Company amounted to 12 % (10.2 bn dollars). De Beers presented its report on results of the first half-year on 27 July. The Company stated that general sales of De Beers Diamond Jewellers had increased by 39 %. Again, no figures of financial performance were reported.
Gareth Penny, Managing Director of De Beers, stated that the USA remained the biggest market for De Beers. That market recorded a “minor growth” despite oil prices and problems related to the crisis in the real estate market. The Company achieved the most noticeable growth due to the sale of its Journey Diamond Jewellery products. Penny stated that sales in Japan were stable and growth in India and China continued. Penny expects the retail sales to increase by 4 to 5 % during the year. The Company intends to open 15 new stores in 2007. There is an intention to open stores in Moscow and Hong Kong.
Italian Bulgari, which is not a member of any of such major groups, presented accounts that are more detailed. Sales of Bulgari SpA increased by 8 % in the second quarter and amounted to 358.8 m. dollars. Sales of jewellery amounted to 153.6 m. dollars (+ 12 %; or + 18 % without regard to the factor of reduced value of dollar and yen against Euro). Sales of watches increased by 6 % and amounted to 101.2 m. dollars, but accessories sales dropped by 12 %.
The second quarter witnessed sales in Europe to increase by 7 % (134 m. dollars), while in North and South America they totalled 41 % (67 m. dollars). At the same time, sales in Asia reduced by 3 % (137 m. dollars).
“Our distribution strategy is focussed on expanding our store chain, reconstruction and modernisation of the existing stores”, says Francesco Trapani, General Director of the Company.
Tiffany intends to publish its results of the second quarter on 30 August. Meanwhile, Mike Kowalski, CEO of the Company, dwelled on its operations and plans.
According to him, the Company has set a mission for itself to open ten new stores a year in the international market and 5 to 7 stores in the American market to make the number of such stores achieve at least a hundred. “Expansion of the store chain is critical for our plan of growth”, stated Kowalski.
In doing so, he says that the expanding Tiffany chain is noted for a high productivity. 2006 saw sales per square foot of a store area amount to 2,800 dollars ($ 2,600 in the USA and $ 2,900 abroad).
“At the same time, remember that our company is also engaged in design and promotion of goods”, says Kowalski. “Some of the collections presented in recent years have already become a modern classic. Our view of the Company’s objectives remains focussed on creation of timeless objects of extraordinary beauty capable of creating a live feeling many years later. Last year, we presented a new collection by Frank Gehry. It encompassed an immense number of innovative ideas. It was accompanied by a provocative marketing and a lot of attention was paid to it in the PR activities of our Company. results of Gehry collection sales exceeded our expectations. It attracted attention to Tiffany brand as a whole”.
According to Kowalski, long-term financial objectives of the Company were to achieve at least 10 per cent return on equity and 15 % earnings per share.
Among major retail outlet chains and jewellery online shops, it was Zale that experienced a really collapsing year (we noted that trend in one of our previous reviews). The chain has already drawn appropriate conclusions with respect to its personnel.
As for other American retail chains, neither Saks nor Macy specify jewellery as a separate category in their accounts. They only report on good sales.
Only jewellery store chain Finlay Enterprises presented detailed financial statistics. According to the Company, its sales decreased by 1.3 m. dollars in the second quarter (ending on 4 August) amounting to 148 m. dollars. Same store sales (sales in stores existing for more than a year) reduced by 3.6 %.
Sales in two corporate jewellery chains of Carlyle and Congress increased by 35 % during the quarter and amounted to 27 m. dollars.
During the half-year, sales increased by 5.9 % (310.9 m. dollars), including a 44 % growth in manufacturers’ jewellery stores as compared with the last year, amounting to 54.2 m. dollars.
The Company will publish its complete financial statements for the second quarter on 29 August.
Blue Nile, a company engage in online sales of jewellery, reported that its sales in the second quarter (before 1 July) increased by 27 % and amounted to 72.1 m. dollars thus increasing expectations of the Company by 5 m. dollars. Its profit amounted to 3.8 m. dollars (+ 21 %). Sales in Canada and Britain amounted to 3 m. dollars (+ 15 %).
Blue Nile plans to expand its operations in the international market.
Amazon.com e-shop stated that sales of jewellery with diamonds increased by 260 % in the second quarter of 2007. However, the company presented no statistical evidence of those data.
Sales of colour jewels increased by 169 %, and proceeds from sales of 925 sterling silver increased by 107 %.
Rough&Polished
