In April and generally in the first quarter of 2012, the state of the diamond and jewelry market in the United States can be described as stable, but without much improvement.
Prices and demand for rough and polished diamonds
Prices and demand for polished diamonds in April kept on an even level, but commerce in general slowed down and sales, despite the press reports about brisk recovery of the U.S. economy, were lower than in the first half of 2011.
This is also confirmed by the data from Rapaport and IDEX, which suggest that in the first quarter of 2012 polished imports dropped 6.7% compared to last year and totaled $4.814 billion, while exports fell only 0.7% to $4.295. Net polished imports decreased 37.5% to $519 million. Rough imports dwindled 31% to $120 million. Incidentally, IDEX draws on the same customs data that are used by the Kimberley Process.
The only segment, which displayed growth, was rough exports going up 4.8% to $110 million thus curtailing net diamond imports to mere $10 million compared to $69 million in the first quarter of 2011. Rough prices increased 7% during the first four months of 2012.
The RapNet Diamond Index (RAPI) for 1.00-carat polished diamonds fell 0.2% returning to the level of the last year. RAPI for 0.30-carat stones rose 0.4% and RAPI for 0.50-carat diamonds increased by 0.5%. RAPI for 3.00-carat diamonds rose 1.2%.
Fluctuation of prices for large diamonds gives rise to reflections on the changes in consumer behavior. In the first three months of 2012, RAPI for 3-carat diamonds declined by 2.7%, but already in April these stones were back on growth track. Apparently, the tune is called by the coming season of weddings, the largest number of which occurs in the summer months.
Prices and demand for jewelry goods
Each week, the International Council of Shopping Centers (ICSC) and Goldman Sachs publish U.S. retail sales metrics. In the four full weeks of April, sales went up 4.5%, 3.2%, 3.6% and 4.2% year-on-year. However, y-o-y data do not give the whole picture. Thus, for the week ended on April 14 after the Easter holiday, sales declined 1% compared to the previous week, as the holiday shopping was over.
It is notable that in the U.S. on Easter Sunday, which this year fell on April 8, all the shopping malls are closed. Why? This is a Catholic holiday and most of the U.S. population is practicing this religion. On Easter Sunday people are usually expected to spend their time in church and family and not on shopping rounds. I learned about this from my personal experience, having decided that day to visit my favorite store, Tiffany & Co, and ask how their holiday sales were going.
“Though consumer spending softened in April, retailers overall have seen solid sales growth so far this spring, a positive indicator we’re heading in the right direction,” said Matthew Shay, President of the National Retail Federation (NRF). Retail sales in the U.S. in April increased 3% year-over-year from 2011, according to NRF.
Online sales continued their brave march across the retail market and grew by 17% in the first quarter of 2012, reaching $44.3 billion, according to comScore, which provides metrics on consumer behavior in the Internet. Sales of jewelry and watches rose by no less than 17% from a year earlier and moved into the category of the most popular goods purchased online. However, this also contributed to higher prices for these products, which rose by about 6% in the first quarter, according to several sources.
Companies, overview
In the first quarter of this year, good financial results in the U.S. market were posted by Blue Nile, LVMH, Petra Diamonds, and Michael Hill. Blue Nile’s sales of engagement rings in the U.S. grew from $45 million to $46.4 million, an increase of 3%, while their non-engagement sales increased by 1%, from $22.3 million to $22.6 million.
LVMH Group also said that its sales in the U.S. were rapidly growing in the first quarter with watches and jewelry going up 17% on an organic basis.
U.S. sales of Australian jewelry offered by Michael Hill rose 11% to $7.1 million in the first three months of the year. London-based Petra Diamonds also pointed to a positive dynamics and steady demand from the U.S. market, which contributed to the 87-percent increase in the company’s profits, which reached $98 million in the first quarter.
However, not everyone was able to complete the first quarter successfully – Pandora’s jewelry sales in the U.S. declined by 10%, down from $118.6 million to $106.6 million.
In late April, Chicago hosted a major regional jewelry exhibition, SMART Jewelry Show, organized by the Instore and Indesign Magazines. The organizers registered greater attendance and consumer activity. This exhibition can be seen as forerunner to the main U.S. jewelry event, which is the JCK Show in Las Vegas to be held there in late May - early June. Judging by the feedback from the organizers and participants of the jewelry industry, all the fun is just beginning.
Olga Patseva, Editor in Chief of the American Bureau, Rough&Polished
