Jewelry CPI at Highest Level Since 1995 The consumer price index (CPI) for jewelry in the U.S. rose to its highest level since June 1995 during the month of November 2009, according to data provided by the Bureau of Labor Statistics (BLS). The November reading of 161.1 points was 3.3 percent higher than the level achieved in November 2008.
This past month’s reading also marked the 22nd consecutive cycle for which the jewelry CPI registered more than 150 points. The index is based upon the reference point of average prices in 1986, which is set at 100 points.
Sources Say Zale Considering RestructuringZale Corporation is working with investment bank Rothschild to evaluate its restructuring options, according to three people with knowledge of the situation, the Dallas Morning News reported. Zale didn’t return telephone calls or email requests for comment and a Rothschild spokesman declined to comment, the newspaper said.
Citibank informed Zale that it will not renew its merchant services agreement, which facilitates financing for the jeweler’s private label credit cards in the U.S. The agreement will expire in March 2011. Zale initiated discussions with Citibank and other parties “with respect to customer financing arrangements to replace the agreement,” the company stated in a U.S. Securities and Exchange Commission (SEC) filing.
Zale canceled some orders from suppliers ahead of Christmas and reported that its same-store sales tumbled 18.6 percent in November, according to the Wall Street Journal. The jewelry retailer is facing mounting debt, the Journal added. Matt Appel, Zale’s chief financial officer (CFO), told the newspaper that while it had canceled some orders, the company has cash on hand to pay its suppliers.
Nicholas White, a former Zale executive who now advises Gerson Lehman Group (GLG), told the Journal that Zale’s lack of merchandise variety, higher prices and marketing and staffing moves “conspire together to create the problems they’ve got.”
—Additional reporting provided by Acquire Media.
Harry Winston’s Revenues SinkHarry Winston Diamond Corporation reported a 50 percent decline in its revenues to $74.8 million for the third quarter of its fiscal 2010, which ended on October 31, 2009. The company recorded a loss of $214,000 for the quarter, compared with profits of $71.9 million one year ago.
Sales from the company’s mining operations fell 77 percent to $20.8 million during the third quarter. There was a 75 percent decrease in the volume of carats sold and a 9 percent decline in rough diamond prices, according to the company. Rough diamond production fell 67 percent to about 300,000 carats during the quarter, with much of this decrease attributed to the six-week shutdown of the Diavik Diamond mine that occurred from July 14 to August 24, 2009. Harry Winston’s mining operations loss for the fiscal third quarter stood at $4.5 million, compared with earnings of $43 million for the comparable fiscal quarter of 2009.
Finlay Posts Loss for OctoberFinlay Enterprises filed its monthly operating report for October with the U.S. Bankruptcy Court in New York, revealing that, excluding reorganization costs, Finlay’s net loss for the month was $33 million. Since filing for bankruptcy, Finlay has recorded a net loss of $109.4 million.
Sales of goods and repair services totaled $37.1 million during the month. The retailer’s cost of goods sold was $30 million, while its cumulative sales since filing Chapter 11 on August 5, 2009 totaled $97.5 million. Total cash stood at $55.6 million.
Finlay’s total assets and liabilities as of October 31, 2009 were $172.4 million, down from $287.3 million on August 5, 2009.
Leo Robbins & Sons Files Chapter 11Leo Robbins & Sons, a Philadelphia-based jewelry retailer, filed for Chapter 11 bankruptcy protection. The move follows an involuntary petition for bankruptcy that was filed against the company by a number of trade creditors in November. The jeweler’s own filing shows that it owes Sovereign Bank approximately $6.9 million and various diamond manufacturers around $3.4 million.
Among the top trade creditors listed in the court documents are Salant Group, owed $899,700; R&R Grosbard, owed $257,680; Leo Schachter & Co., owed $182,772; and Overseas Diamonds, owed $159,496.
Movado Reports Loss Movado Group, a designer watch manufacturer, reported that its sales fell 5 percent to $129 million in the third fiscal quarter that ended on October 31, 2009. The company posted a net loss of $20.9 million, compared with profits of $15.7 million one year ago.
The loss came despite Movado’s 19 percent expenses reduction to $57.4 million. Its cost of sales rose 36 percent to $68.6 million for the fiscal quarter. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) were $9.9 million, compared with $22.5 million in 2008.
For the first nine months of the fiscal year, Movado’s sales declined 22 percent to $286.2 million. The company recorded a net loss of $31.1 million for this period, compared with a net profit of $25.1 million in 2008.
Disappointing November Sales for U.S. Retailers Department store sales in the U.S. fell 4.7 percent to $15.7 billion during November, according to U.S. Department of Commerce data. Retail trade sales rose 2.2 percent from November 2008, while retail sales for all categories combined, excluding motor vehicles and parts, increased by 1.9 percent year over year to $352.1 billion for the month.
In the first 11 months of the year, U.S. department store sales dropped 6.5 percent to $161.4 billion compared with 2008. Retail sales for all categories dropped 6 percent to $3.1 trillion during the period, according to the data.
Meanwhile, an International Council of Shopping Centers (ICSC) and Goldman Sachs survey of the country’s chain stores revealed that overall sales dropped 0.3 percent in November, representing “a disappointing reversal in the pace of sales after two consecutive monthly gains.”
Saks Incorporated’s sales slumped 25.1 percent to $245.1 million during the month as its same-store sales declined 26.1 percent. Similarly, Neiman Marcus’ sales dropped 12.7 percent to $305 million, while the retailer’s same-store sales decreased 7.5 percent. Macy’s reported that its November sales fell 6.3 percent to $2.2 billion, with its same-store sales declining 6.1 percent.
JCPenney’s November sales decreased 5.2 percent to $1.7 billion, while its same-store sales were down by 5.9 percent. JCPenney reported that “strong sales for the Black Friday weekend offset slightly weaker sales beginning mid-month and leading up to Thanksgiving.”
Kohl’s Corporation reported a 7.1 percent increase in November sales to $1.75 billion, with its same-store sales up 3.3 percent. Nordstrom’s sales rose 5.9 percent to $749 million, while its same-store sales grew 2.2 percent. Dillard’s, Inc. sales fell 13 percent to $437.9 million and its same-store sales dropped 11 percent.
Sales at Costco Wholesale Corporation jumped 9 percent to $6 billion in November. U.S. same-store sales were up 2 percent and international same-store sales soared 21 percent. BJ’s Wholesale Club, Inc. reported that its November sales increased 6.4 percent to $833.6 million as its same-store sales grew 1 percent.
Online Jewelry Prices Jump on Cyber MondayThe average price point for jewelry purchased online on Cyber Monday, the Monday following Black Friday, rose 14.3 percent from 2008 to $277.39, according to Coremetrics. However, the average number of jewelry items per order fell 17 percent to 1.55.
Across all retail categories, U.S. shoppers purchased 30 percent more items online on November 30, 2009 than they did one year ago, while the average amount spent per online order rose 38 percent to $180.
Department stores experienced a 9.6 percent drop in the value of the average online order, which stood at $125.60 this year. Shoppers purchased, on average, 3.05 items per order, a decrease of 13.4 percent from Cyber Monday 2008.
Article from the Rapaport Magazine - January 2010. To subscribe click here.