RAPAPORT... Many major jewelry chains saw strong increases in their holiday sales for 2006 over 2005, with diamond jewelry doing particularly well.
Signet, which operates more than 1,300 stores in the U.S., including Kay Jewelers, Jared The Galleria of Jewelry and a number of regional names, saw its like-for-like sales for the nine weeks before December 30 rise by 7.5 percent and total dollar sales increase by 13.9 percent. The company said that television commercials for Kay and Jared were important in helping to drive sales growth. Circle and Journey products performed well.
Terry Burman, group chief executive for Signet, said that in the United States, Signet “significantly outperformed” its main competition and increased market share, with Jared, the off-mall superstores, performing strongly, as did Kay.
According to Burman, diamond sales were up, increasing from 71 percent to 73 percent of sales mix and did well over the Christmas season. “We got a nice lift in the diamonds,” he said.
Gift cards grew as well. “Gift cards, while small, because we’re in a narrow category, were up meaningfully over the last year, well into double digits,” Burman said.
Signet, which has three formats — off-mall, outlet stores and metro stores — plans to increase the number of off-mall stores it will open, Burman said. “The program is now about four years old. We ran a test for three years and are pleased with off-mall store results.”
The company also opened three metro stores, according to Burman, with satisfactory results. The challenge is that real estate prices in high-profile metro areas have become prohibitively high. The company has found desirable locations, but can’t justify the rent for those locations.
TIFFANY & CO.
Tiffany & Co. reported geographically broad-based sales growth between November 1 and December 31 with U.S. retail sales increasing 12 percent to $432.4 million. Comparable store sales rose 8 percent, due to sales growth of 15 percent in Tiffany’s New York flagship store and 7 percent in comparable branch stores. That resulted from increases in both the number of transactions and in the average amount spent per transaction. Five new stores opened in the U.S. in 2006 and those stores also contributed “meaningfully” to U.S. growth, according to the company. Michael J. Kowalski, chairman and chief executive officer (CEO) of Tiffany, said that its sales growth for the holiday exceeded expectations, with healthy sales increases in many product categories ranging from diamonds to silver jewelry.
Kowalski said that, based on the success of the newly opened stores, the company plans to accelerate the pace of new store openings to five to seven in the U.S. It is also going to introduce a wide range of new products.
The U.S. results came against a backdrop of even stronger growth in international retail sales, which increased 18 percent to $283.5 million. Most international markets saw strong sales growth, which more than offset comparable store sales declines in Japan.
Mark Aaron, vice president of investor relations, said Tiffany saw the biggest percentage increase in U.S. sales in jewelry costing $50,000 or more. Jewelry at all different price levels grew as well. “There was really a lot of growth at the high end,” he said.
And high-end jewelry means diamonds. Aaron said such sales included engagement jewelry as well as other kinds of diamond jewelry.
Gift card sales increased for Tiffany as well. Aaron described gift cards as small but growing and said that they remain a “not insignificant but relatively modest” part of Tiffany’s business.
ZALESThe Zale Corporation reported a more modest increase. Its comparable store sales increased 2.3 percent for November and December. Total revenues for the two-month period were $905 million compared to $860 million last year, an increase of 5.2 percent. Last year’s total revenues exclude the results of the Bailey Banks & Biddle stores that were closed and managed by an independent liquidator during the second fiscal quarter of 2006. Including the store closures, last year’s total revenues for the two-month period were $873 million, which were exceeded this year by an increase of 3.7 percent.
While the Zales brand gained sales momentum, margins were below expectations due to more aggressive pricing and increased promotional activity. In addition, the Gordon’s and Piercing Pagoda brands delivered comparable store sales decreases, offset by strong performances in Zale Canada, Zales Outlet and ZLC Direct.
Betsy Burton, the company’s CEO, expressed disappointment over the fact that the company did not meet its sales and profit goals for the holidays. However, she said Zales made some progress on several fronts. Most important was the fact that it attracted back its core customers with improved product assortments and marketing. She said that the company knows what it needs to do and will continue to make the changes necessary for long-term sustainable growth.
Diamonds did very well, with sales up 35 percent as a result of Journey, Circle and Brilliant Buy key items, according to David Sternblitz, vice president and treasurer of the Zale Corporation. He said that there was no significant change in gift cards, but that they present an opportunity for the future.
FRED MEYER JEWELERS
Peter Engel, president of Fred Meyer Jewelers, said that the company’s jewelry stores had a very strong year, including Christmas. “Our year has been the best year ever,” he said, adding that the preceding year had been the company’s best ever. The company does not release its holiday results.
Engel said that the season started early, then got quiet, until the very end of the Christmas shopping season. “Thanksgiving weekend was fantastic, then it did quiet down in the middle, then at the very end it picked up,” he said. The weekend before Christmas Eve, which included Thursday, Friday, Saturday and Sunday, was a heavy shopping weekend.
“Diamonds were fantastic,” Engel said. That was in part due to what he described as “incredible” bridal sales and Journey sales. “We were well prepared, we had extensive training and we had great in-store [displays] with our visuals and we had the product,” he said, crediting both the company’s own advertising as well as the Diamond Promotion Service (DPS) ads with driving those sales.
White gold was still dominant, but there was an increase in yellow gold sales. The company had anticipated this, particularly in diamond fashion jewelry.
Fred Meyer also had its best year ever with gift cards, mainly because its presence was better. Engel said that he sees even more potential for gift cards in the future.
Article from the Rapaport Magazine - February 2007. To subscribe click here.