Rapaport Magazine

Retail Bulletin

Jewelry CPI Flat

By Rapaport

RAPAPORT... The consumer price index (CPI) for jewelry in the U.S. was flat in February 2010 compared with one year ago, according to data provided by the Bureau of Labor Statistics (BLS). The February reading of 155.533 points was 0.074 points lower than in 2009, representing the first time the measure has fallen year over year, albeit very slightly, since March 2006. The reading for January 2010 was 155.92 points.

February’s reading marked the 25th consecutive cycle for which the jewelry CPI registered more than 150 points. The index is based on the reference point of average prices in 1986, which is set at 100 points.

Sotheby’s Ends 2009 With Loss

Sotheby’s posted its second-best fourth quarter ever, but closed 2009 with a loss of $6.5 million, compared with a profit of $26.5 million in 2008, due to the economic downturn. The auction house’s revenues fell 30 percent to $485 million during the year.

During the three months that ended on December 31, 2009, Sotheby’s reported that its revenues rose 31 percent to $218.3 million. The company’s net income was $73.6 million during the period, versus a net loss of $9.3 million one year ago. Sotheby’s cut its operating expenses by 28 percent to $119.4 million during the quarter.

No Sales for Finlay in January

Finlay Enterprises reported a net loss of $6.5 million for January after failing to record any sales for the month. The jewelry retailer’s loss since filing Chapter 11 in August 2009 stood at $91.5 million, while its total sales have reached $236.1 million since then, the company reported in a filing submitted to bankruptcy court. Finlay’s total accounts payable during January came to $24.6 million, while its cash on hand stood at $74 million at the end of the month.

Tiffany’s Sales Grow

Tiffany & Co. reported that its net sales increased 17 percent to $981.4 million during the fourth quarter that ended on January 31, 2010. At constant exchange rates, which do not take currency fluctuations into account, sales grew by just 13 percent.

Worldwide comparable-store sales rose 11 percent during the fourth quarter, which included the Christmas season. Profits jumped to $140.4 million compared with $31 million one year ago.

Across the Americas, Tiffany’s sales improved by 14 percent to $523.5 million during the quarter, while comparable-store sales in the U.S. were up by 11 percent. Sales at the New York flagship store and comparable U.S. branch stores increased by 22 percent and 8 percent, respectively, in the fourth quarter.

Tiffany’s full-fiscal-year sales sank 5 percent to $2.7 billion as its comparable-store sales declined 8 percent. Net earnings for the fiscal year grew 20 percent to $264.8 million.

Fiscal-year sales across the Americas fell 11 percent to $1.4 billion and comparable U.S. store sales dipped 15 percent. Fiscal-year sales at the retailer’s New York flagship store declined 15 percent.

In the Asia-Pacific region, Tiffany’s sales rose 4 percent to $957.2 million. In Europe, its sales increased 10 percent to $311.8 million for the year due to strong growth in most of the region’s countries.

At the end of its fiscal year, cash and cash equivalents were $786 million, up from $160 million one year ago, while total short-term borrowing and long-term debt stood at $754 million, up from $709 million.

Tiffany predicted that its 2010 worldwide sales will increase 11 percent and expects to open 17 new locations. The jeweler also plans to spend about $200 million on capital expenditures and raise its inventory levels by high single digits.

Berkshire Hathaway’s Jewelry Revenues Fall

Berkshire Hathaway’s jewelry retail division, comprised of Borsheim’s Jewelry, Helzberg Diamonds and Ben Bridge Jeweler, saw its revenue decline by 12 percent in 2009, the investment group reported, while it posted a pretax loss for the year that ended on December 31, 2009. The company did not provide totals for the jewelry division, but instead grouped them with its other retail businesses, which include four home furnishing companies and See’s Candies.

Berkshire Hathaway’s total retail revenue fell 8 percent to $2.9 billion, while its pretax earnings were relatively unchanged at $161 million, according to its annual report. Total revenue rose 4 percent to $112.5 billion in 2009, while net income increased by 61 percent to $8.1 billion for the year.

Ben Bridge Jeweler has 73 stores in 12 states and employed 744 workers at the end of the reporting period. Helzberg Diamonds has 230 stores and employs 2,147 people, while the smallest unit in the jewelry division, Borsheim’s Jewelry, employs 168 people.

Bulgari Posts Loss

Bulgari S.p.A. posted a net loss of $17.9 million (EUR 13.6 million) in its fourth quarter that ended on December 31, 2009, compared with a profit of $6.9 million (EUR 5.7 million) one year earlier. The Italian luxury goods company had previously reported that its total sales fell 5.1 percent to $409 million (EUR 297 million) during the quarter, with jewelry being its strongest unit, when sales were flat at $178 million (EUR 129 million).

For the full year, the Bulgari’s net loss totaled $64.8 million (EUR 47.1 million), compared with a net profit of $114.1 million (EUR 82.9 million) in 2008. Revenues fell across all of its units, with jewelry down 10.3 percent to $554 million (EUR 402.4 million). Francesco Trapani, Bulgari’s chief executive officer (CEO), noted that the company recorded growth in the high single-digits during the first two months of 2010.

Charles & Colvard’s Sales Tumble

Charles & Colvard’s sales fell 33 percent to $2.4 million in the fourth quarter that ended on December 31, 2009, while the company’s total costs fell by only 2 percent to $2.8 million. The moissanite creator reported a net loss of $440,150 for the quarter, a marked improvement compared with the loss of $1.3 million it reported one year ago.

For the full fiscal year, Charles & Colvard’s net loss was $3.4 million, a 45 percent improvement over last fiscal year’s loss of $6.2 million. The company had $7.4 million in cash at the end of the fourth quarter and generated $1.9 million in cash from its operations during fiscal 2009.

ShopNBC’s Loss Narrows

ShopNBC recorded a loss of $8.8 million for its fourth quarter, compared with a net loss of $43.8 million one year ago. The television and internet shopping network’s revenue rose 7.4 percent to $155.3 million for the quarter that ended on January 30, 2010.

Jewelry accounted for 20 percent of the product mix during the quarter, down from 29 percent one year ago. Watches, coins and collectibles, which represented 33 percent of the product mix, replaced jewelry as ShopNBC’s top-selling category.

For the full fiscal year, sales fell 7 percent to $528 million and the company posted a net loss of $42 million compared with a net loss of $97.8 million in the previous year.

Bidz.com’s Sales Slip

Online jewelry retailer Bidz.com reported that its merchandise sales fell 29 percent to $25 million in its fourth quarter, which ended on December 31, 2009. The company’s total revenues, including $2.4 million in wholesale sales, dropped 22 percent to $27.5 million during the three-month period and Bidz.com saw its net income fall 90 percent to $288,000.

For the full year, Bidz.com’s merchandise sales fell 40 percent to $177.1 million as its total revenues dropped 47 percent to $207.4 million. The company’s net income declined 83 percent to $2.5 million.

Leon Kuperman, the company’s president and chief technology officer (CTO), said that the company is monitoring its operating expenses, margins and inventory in order to enhance its financial position. David Zinberg, Bidz.com’s chief executive officer (CEO), added that management is beginning to see positive momentum in the company’s core business, as well as in its new initiatives, in 2010.

Article from the Rapaport Magazine - April 2010. To subscribe click here.

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