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Industry
Holiday Jewelry Sales Solid
While holiday jewelry sales slipped in Asia, increases in the U.S. contributed to a solid season overall.
By Brian Bossetta
As many analysts predicted, the Christmas season for U.S. retailers was a strong one, backed by rising consumer confidence and a sense of returning financial health — and the jewelry sector benefited from this more positive economic outlook. As early as one week before Christmas, 17 percent of shoppers had already purchased jewelry, according to the National Retail Federation (NRF). Along with steadily improving consumer confidence, better job numbers and record gains on Wall Street contributed to more luxury purchases, including jewelry, according to most economic forecasters. MasterCard Advisors’ SpendingPulse, which tracks national retail sales, reported that jewelry sales from October 31 through December 11 of 2014 increased 2.6 percent. Jewelry was also expected to do well during the holidays because of shoppers “rewarding themselves” for getting through the toughest economic period in America since the Great Depression, according to Dr. Jim Taylor, vice chairman of YouGov America.
Signet reported — based on figures collected after the first week of January — solid holiday sales, with same-store sales rising 3.6 percent year on year for the eight-week Christmas season, which ended on December 27, 2014.
Signet’s total sales for the holiday hit $1.85 billion, a 45 percent growth. The enormous 45 percent jump, according to David Bouffard, vice president for Signet corporate affairs, reflected the sales contribution of Zale, which Signet acquired in February 2014. The company’s strong showing in its U.K. division also contributed to the high volume of sales. Comparable store sales in the U.K. shot up 9.7 percent and total sales reached $215.1 million, a 5.6 percent jump. Signet’s performance in the U.K., he noted, was its best in 12 years.
“These results were driven by fresh, trend-right merchandise offerings and strategic collaboration with the Sterling Division,” Bouffard said. Signet’s U.S. Sterling division increased same-store sales 2.5 percent and enjoyed a 4.2 percent spike in sales, which totaled $1.12 billion for the holiday period. Sales at Kay Jewelers, which also falls underneath the Signet umbrella, reached $714.6 million, growing 5.8 percent year on year. Jared, also a Signet holding, took in sales of $336.2 million, a 5 percent increase.
Total sales at Zale came in at $521 million. Its 2013 tally of $556 million in total sales was reflective of the greater number of its stores open in 2013 compared to 2014. “We were very pleased with the performance of the Zale division,” Bouffard said, adding that Signet’s investments in merchandising, store team member training and advertising enhanced the newly acquired division. He also highlighted the parent company’s “successful execution of our product, marketing and omnichannel strategies.”
Signet’s ecommerce sales, Bouffard added, increased by 90.9 percent, when Zale’s ecommerce sales are included. He noted that “Each division of the company delivered higher ecommerce growth and penetration relative to sales.”
Bouffard also noted some of Signet’s brands and collections — the Vera Wang Love Collection, in particular — as catalysts behind the profitable holiday season. “In the Sterling division, branded bridal and select diamond fashion jewelry collections performed well,” Bouffard said, highlighting Neil Lane Bridal and Tolkowsky in branded bridal and Diamonds in Rhythm and Le Vian in select fashion jewelry. “Diamond stud earrings also sold well,” he added.
Luxury retail brand owner Richemont also posted positive holiday sales, reporting a 4 percent increase in year-on-year sales, which reached $3.59 billion for the third quarter that ended December 31, 2014. Sales from Cartier and Van Cleef & Arpels, two of Richemont’s top brands, rose 3 percent to $1.85 billion. These strong sales and growth in the U.S. and Europe during the Christmas season, however, were partially offset, the company stated, by declining revenue in Japan and the Asia-Pacific region. Richemont also underscored a “poor trading environment” in Hong Kong — a major market for the company’s Swiss watches — where the anti-bribery crackdown and pro-democracy demonstrations dampened shopper traffic and luxury sales.
Despite the overall Christmas success of the jewelry sector, sales for one of the biggest luxury jewelry companies slumped during the holidays. Tiffany & Co. experienced a disappointing season, reporting holiday sales slipping 1 percent year on year to $1.02 billion for the two-month season that ended December 31. The company’s net sales on a constant-exchange-rate basis — which excludes the effect of translating sales dominated by foreign currency into U.S. dollar amounts — increased worldwide by 3 percent and comparable store sales equaled the prior year’s totals.
“Clearly, sales for the holiday period were disappointing overall, with significant variability in performance by region and by product category,” said Michael J. Kowalski, Tiffany chairman and chief executive officer (CEO). Sales in the Asia-Pacific region were “solid,” according to Kowalski, though he said sales in Japan “continued to be weak.” European sales, he also stated, “rose nicely in local currencies” while sales in the Americas “declined slightly after a very strong start to the year.” Kowalski highlighted the company’s “very strong and concentrated marketing focus on Tiffany T,” which generated solid sales growth in fashion gold jewelry but did not translate, he said, into “the broader sales momentum we had anticipated for Tiffany’s other jewelry sectors.”
Looking ahead, Tiffany president Frederic Cumenal said, “For the coming year, we are planning cautiously as we anticipate significant headwinds from the stronger U.S. dollar against all of our key currencies that, as we experienced in the Christmas period, negatively affects both the translation of results and sales to tourists in the U.S.” These factors, according to Cumenal, “will likely result in our planning low- to mid-single-digit sales and earnings growth in 2015.”Article from the Rapaport Magazine - February 2015. To subscribe click here.
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