Shares of a number of companies, including Bulgari and Tiffany, went downwards due to fears that the weakness of the economy will affect sales. The global luxury index estimated at the German Borse, allowed investors in 2007 to note, that the results of the recently dynamically growing sector fell almost by 16% of their the peak parameters of the beginning of June.
The majority of companies are still reporting on growing indices of income and profits, but the growth expressed in double figures, probably, has remained in the past. This is a conclusion of Financial Times.
In the opinion of the majority of mass-media and analysts, the past pre-Christmas trading season was not very successful for the jewellery industry. Representatives of traditional retail trading have shown more than modest results, at the same time online sellers have reported record financial results.
However, summing up the Christmas Eve season, The New York Times stated the following: while during the last two months of the year a rough growth of Internet trade was marked, the on-line sales of jewels and watches suffered a recession. 70% of sales made rather practical items, such as household equipment and furniture.
Many customers of retail shops waited up to the last moment for increase in discounts were ready to postpone purchases to the period of after Christmas sales. In this situation jewels of a low price bracket were in favor.
The after Christmas days really regaled American consumers with various kind of discounts from Macy's, JC Penny, Zales, Walmart and Bloomingdales.
Nevertheless journalists noted, that the jewellery networks which position themselves as sellers of the class lux products (De Beers, Tiffany), did not declare any discounts or sales.
The companies acting in the top price bracket (e.g. Hermes and Cartier) will probably go through nowadays better, than those targeted to customers from wider social layers. The big conglomerates (LVMH, PPR and Richemont) also have the better chances in comparison with monobrands. That is the opinion of the Financial Times.
“The results of the holidays sales of the Company are inconsistent, but all of us still hope for good results in the 4th quarter which will terminate on 31 of January”, Michael Kovalski, the head of Tiffany, states. “While we enjoyed a long strong growth of sales in Europe and Asia-Pacific Region except for Japan, the American sales were not so strong after the growth during the most part of the year. The 10 percent growth of sales in the New York shop was achieved due to foreign tourists. We believe, that the recent outflow of American consumers from shops reflects more cautious attitude of customers towards the economic situation and the related factors. At the same time we observe a favorable commercial growth in products for engagement and silver jewellery”.
The reduction of price of Tiffany shares can be beneficial for the company which pursues a policy of redemption.
Sterling Jewelers and Zale have stated “disappointing sales” of the holidays season.
Zale declared that the gross revenue for the bi-monthly period amounted to 723 million dollars, which represent the fall of 10.1% from the same period a year ago.
Same-store sales (sales of the comparable shops working for more than one year) in Sterling Jewelers during the 8-week period (through December 29) suffered a 8.1% year-on-year decrease.
The USA Internet companies have more reasons to be optimists. The totality of online sales during the holiday season (November - December) amounted to about $28 billion, that is a 19% YoY growth.
However it is curious, that the most profitable for online retailers tuned to be the so-called Green Monday (10th of December), when the Internet sales amounted to $880 million (a 33% growth compared to 2006). This is the last day when it is possible to order the goods in any point of the USA and to receive it for sure before the Christmas. Probably, in the Internet a large number of consumers also preferred to delay their purchases up to the last moment.
Instead of attracting customers with discounts, Ice.com, an Internet shop in jewellery, offered the qualified buyers an opportunity of payment for goods of more than 300 dollars by ten deferred installments. From that moment the quantity of payments increased from 5 up to 10, and the cost of an average order in the online company raised by 25%. This is a 60% YoY growth. The success of this plan induced the company to proceed with it up to the Saint Valentine's Day.
As a whole in 2007 the company’s sales grown up by 70% and amounted to 83.4 million dollars.
Mark Vadon, the head of the Blue Nile company, baptized the 2007 (including the holiday season) a “great year” for Blue Nile.
The report of the company for the 4th quarter and for 2007 as a whole will be published on 12th of February. Yet already in the middle of January the company declared about 24% growth of sales in the 4th quarter, as its management decided, that this news will be important for the market on the background of depressing reports of the majority of retail chains.
