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UK Jewelers Weather Brexit Uncertainty

Aug 28, 2017 8:47 AM   By David Brough
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The weaker pound has boosted jewelry demand from tourists as travelers visit the UK seeking cheap deals, retailers have reported.

Jitters over Britain’s exit process from the EU and the outlook for the UK economy have dragged on the pound against leading currencies such as the dollar and euro since the Brexit referendum last year, according to market analysts.

The average transaction value in Signet Jewelers’ UK division rose 14% in the second quarter ending July 29, while the number of purchases fell 15.5%, the US major reported last week. Same-store sales at Signet’s UK stores fell 3.4%, mainly due to fewer transactions in relatively low-priced fashion jewelry. However, strong sales of luxury watches drove the strong average transaction value.

The weak pound has been a bonus for tourists seeking luxury goods in the UK, as they have been able to use their stronger currencies to buy prestige timepieces at cheaper prices than they would get at home. Richemont, which owns luxury jeweler Cartier and watch brands Jaeger-LeCoultre and Montblanc, noted “strong growth” in the UK market for the fiscal year that ended March 31.

Several independent jewelry retailers in the UK said revenue was up year on year due largely to the impact of a higher average purchase value in precious jewelry items, even as transaction volumes fell.

The sharp drop in the pound’s value after the Brexit referendum — sterling has fallen 13% since last year’s June vote — increased the cost for British retailers of restocking gold and other precious metals and gemstones, which are priced in dollars. Paul Henderson, owner of Wave Jewellery, a retailer based in northern England, found he had to pass these price increases on to customers.

Even so, Wave Jewellery — with stores in Manchester and Kendal — saw sales rise year on year. This occurred despite Brexit-related uncertainties and a terror attack in Manchester on May 22 that forced the store there to close briefly, Henderson reported. Bridal sales to millennials were buoyant in July and August, he added.

The Brexit vote triggered a brief slowdown in sales, as consumers were nervous, said Rachel Furr of Furr & Co, a jeweler located in the southern English town of Hungerford.

Business at Furr & Co picked up by the early fall of 2016, but the pound’s post-referendum slide pushed up prices of dollar-denominated metals and stones, increasing the cost of buying from suppliers in the eurozone.

The UK general election this past June, which gave no party an absolute majority, also generated uncertainty, Furr said.

The Brexit vote did not seriously affect business at family-owned Bourne End Jewellers in Buckinghamshire, southern England, according to store manager Jessica Bull. However, the uncertainty may have led some customers to prioritize repairs rather than new purchases, Bull suggested.
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Tags: Bourne End Jewellers, Brexit, Buckinghamshire, Cartier, David Brough, Furr & Co, Hungerford, Jaeger-LeCoultre, Jessica Bull, Jewelry, Kendal, Manchester, Montblanc, Rachel Furr, Signet, Signet Jewelers, UK, Wave Jewellery
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