The Conference Board’s Consumer Confidence Index® dipped in December 2010, after posting a slight improvement in November. The Index now stands at 52.5, down from 54.3 in November, while the Present Situation Index declined to 23.5 from 25.4. The Expectations Index also decreased to 71.9 from the 73.6 points posted in November. The Consumer Confidence Survey® is based on a representative sample of 5,000 U.S. households.
Lynn Franco, director of the Consumer Research Center at The Conference Board, commented, “Despite this month’s modest decline, consumer confidence is no worse off today than it was a year ago. Consumers’ assessment of the current state of the economy and labor market remains tepid and their outlook remains cautious. Thus, all signs continue to suggest that the economic expansion will continue well into 2011, but that the pace of growth will remain moderate.”
Consumers’ appraisal of economic conditions in December was more pessimistic than in November, with those claiming business conditions are “good” declining to 7.5 percent from 8.5 percent and those rating jobs as “plentiful” dropping to 3.9 percent from 4.3 percent. The number of survey participants describing jobs as “hard to get” narrowly increased, however, to 46.8 percent from 46.3 percent in November, while the percentage anticipating that business conditions will improve over the next six months was essentially flat month to month at 16.6 percent.
Jewelry Sales Edge Up
American Express Business Insights reported that U.S. luxury jewelry spending in the third quarter of 2010 that ended on September 30 rose just 3 percent year on year as the average purchase amount increased by 6 percent. Men accounted for 71 percent of U.S. luxury jewelry purchases and customers over the age of 46 made 54 percent, with shoppers under 35 accounting for only 25 percent of these purchases during the period.
Online Retail Hits Record High
MasterCard Advisors’ SpendingPulse, a macroeconomic report that tracks U.S. retail and service sales, revealed that online retail sales for the full 2010 holiday season, beginning October 31 and ending December 23, rose 15.4 percent year on year to $36.4 billion. Apparel purchased online was the clear leader, reflecting a sales gain of 26 percent, while online electronics sales were up 12 percent and online department store sales increased by 11 percent. Jewelry sales transacted online rose 4.5 percent.
“Today, ecommerce accounts for a much larger share of overall retail sales compared to a few years ago,” explained Michael McNamara, vice president of SpendingPulse. “And during this holiday season, it registered double-digit growth for six out of seven weeks.”
SpendingPulse also found that sales on six days of the holiday season surpassed $1 billion compared with only three such days in 2009.
Internet information provider comScore, meanwhile, found that through December 19, overall holiday ecommerce sales reflected an improvement of 12 percent against 2009, totaling $28.4 billion. The week that ended on December 19 saw ecommerce sales reach $5.5 billion, an annual increase of 14 percent, while the final shopping weekend before Christmas achieved online sales of $19 million, a 17 percent gain against last year.
Harry Winston’s Sales Soar
Harry Winston Diamond Corporation’s sales rose 88 percent year on year to $140.9 million during its third quarter of fiscal 2011 that ended on October 31, 2010. While the company’s cost of sales rose 90 percent to $85.8 million, its profits nonetheless jumped to $4.7 million from the loss of $1.4 million posted one year ago.
The diamond mining and luxury retail company recorded third-quarter consolidated net income of $3.9 million or 5 cents per share, attributed to shareholders. Included in this consolidated net income was a net foreign exchange loss of $3 million, which was based primarily on future income tax liabilities, compared with the net foreign exchange gain of $1.6 million recorded for fiscal 2010.
Rough diamond sales for the quarter soared 192 percent year on year to $60.7 million and earnings from mining operations rose to $8.3 million from a loss of $4.5 million. Harry Winston’s retail sales were up 49 percent to $80.2 million and earnings from operations rose to $5.4 million from a loss of $455,000. The increase in rough diamond sales was primarily the result of a 182 percent increase in the volume of carats sold. Rough diamond prices showed continued strength this quarter, increasing approximately 20 percent, while rough diamond production was 115 percent higher than in the comparable calendar quarter.
Harry Winston held two rough diamond sales in the third quarter compared with only one in the third quarter of fiscal 2010. The company reported that retail sales in the U.S. rose 76 percent to $22.6 million, European sales increased 56 percent to $32.6 million and Asian sales gained by 23 percent to $25 million during the quarter. The company expects the retail segment’s sales growth rate for the fiscal year to be in the range of 35 percent to 40 percent.
ShopNBC’s Online Sales Rise
ShopNBC reported a strong start to the 2010 holiday season as its Cyber Monday sales rose 36 percent compared against Cyber Monday 2009. The retailer reported that its ecommerce sales accounted for a record high of 56 percent of its total sales that day, compared with 48 percent one year ago. ShopNBC’s total sales rose only 12 percent on Black Friday, however, with its online sales representing 51 percent of that total, compared with 37 percent in 2009.
Keith Stewart, ShopNBC’s president, explained that video game consoles, big screen televisions, GPS devices, jewelry and watches represented some of the best-selling categories as of press time. He said the ease of shopping remotely, plus the company’s expanding inventory, helped drive its sales.
“The multichannel shopper was quite active at ShopNBC over the holiday shopping weekend, from Black Friday through Cyber Monday,” he stated. “We achieved sales gains and increasing ecommerce sales penetration by keeping the customer’s interest and attention over a sustained period of time on our multiple platforms of TV, online, mobile and social media.
“Additionally, ShopNBC’s focus on highlighting the benefit of online shopping continued to resonate with the consumer,” he continued. “Going forward, we remain highly focused on keeping the customer’s appetite satisfied with new products, exciting programming and strong service to continue building loyalty and community during the holidays and beyond.”
CARE Revises Gitanjali’s Rating
Accord Fintech reported that Credit Analysis & Research (CARE) revised the rating assigned to Gitanjali Gems’ short-term facilities from “PR1” to “PR2+.” The facilities with this rating are considered to offer adequate capacity for the timely payment of short-term obligations and to carry higher credit risk than facilities with higher ratings.
Gitanjali Gems is one of the leading players in India’s jewelry segment and was the first company to engage in cutting and polishing diamonds in Surat.
— Additional reporting provided by Acquire Media.
Article from the Rapaport Magazine - January 2011. To subscribe click here.