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Retail Bulletin
Consumer Confidence Posts Modest GainThe Conference Board Consumer Confidence Index® inched up in April to 65.4, a 1.6 point gain over March.The Present Situation Index increased to 39.6 from 37.5, while the Expectations Index rose to 82.6 from 81.3.Although confidence remains weak, consumers’ assessment of current conditions gained ground for the seventh straight month. Their appraisal of present-day conditions, although mixed, also improved in April compared against March. While the number of consumers who thought conditions are “good” decreased slightly to 14.8 percent from 15 percent, the number of people who believe business conditions are “bad” declined by the same percentage, edging down to 36.4 percent from 36.6 percent. However, consumers were more positive regarding employment. Those saying jobs are “hard to get” declined to 41.8 percent from 44.4 percent, while consumers stating jobs are “plentiful” increased to 5.2 percent from 4.6 percent.Moderate improvement was also noted in consumers’ short-term outlook, suggesting consumer concerns about economic uncertainty may be easing. While those expecting business conditions to improve over the next six months declined to 18.8 percent from 20.8 percent, those anticipating business conditions will worsen decreased to 14.2 percent from 15.5 percent. Consumers were mixed about the labor market outlook for the next six months. Those expecting more jobs in the months ahead declined to 17.5 percent from 19.6 percent in April, while those anticipating fewer jobs declined to 19 percent from 20.5 percent. The proportion of consumers expecting an increase in their incomes improved to 16.7 percent from 15.2 percent. U.S. Jewelry CPI Sets RecordThe U.S. consumer price index (CPI) for jewelry hit yet another record high in 2011, this time for the month of March. The CPI jumped 7.9 percent year on year to 171.72 points, marking the third consecutive month for which the reading topped 170 points and the 38th consecutive month with a reading higher than 150 points. The jewelry price index is based on the reference point of average prices in 1986, which is set at 100 points.Meanwhile, the CPI for all product categories rose 2.7 percent year on year in March to 223.49 points, showing signs of inflation. The base period for that overall reading was provided by an average of 100 points taken from 1982 to 1984.Signet’s Sales, Profit RiseSignet Jewelers reported that its fourth-fiscal-quarter sales rose 6.2 percent year on year to $1.27 billion for the period that ended on January 29, 2011. U.S. same-store sales rose 11.4 percent, but fell by 2.9 percent in the U.K. Signet’s cost of sales dropped by 1.7 percent to $752 million. Net income was down 8.7 percent during the fourth fiscal quarter to $105 million. During fiscal 2011, which also concluded on January 29, 2011, Signet’s sales rose 5 percent year on year to $3.44 billion, while its cost of sales was essentially flat, slipping just .6 percent to $2.19 billion. Profits rose 27 percent to $200 million and overall same-store sales gained by 6.7 percent. Signet’s same-store sales in the U.S. rose 8.9 percent, but in the U.K., these sales fell 1.4 percent. During the year, Signet’s U.S. division’s market share of specialty jewelry increased by 30 basis points to 9.3 percent. Bridal jewelry from Neil Lane and the Tolkowsky Diamond performed well. Sales of branded, differentiated and exclusive merchandise, such as The Leo Diamond, Open Hearts by Jane Seymour, Love’s Embrace, Le Vian and Charmed Memories, increased by about 300 basis points to comprise 22 percent of U.S. merchandise sales.
In addition, the Jared stores benefited from a “recovery in spending among U.S. households” with above-average incomes, along with the continued expansion of the Pandora range. SEC Ends Zale Investigation Without PenaltyZale Corporation told shareholders that the Securities and Exchange Commission (SEC) completed its investigation and does not intend to recommend any enforcement action against the company. The SEC investigation commenced in October 2009.The company also extended the maturity of its $120 million bank credit facility to April 30, 2014 from its original maturity date of August 11 of this year, including a seasonal adjustment of $20 million. Zale’s $650 million commitment under the facility remains unchanged, with participants in the extension including administrative agent Bank of America, General Electric Capital Corporation and Ally Bank. Bulgari’s Jewelry Revenues Rise Bulgari Group reported that jewelry revenues rose 29 percent year on year to $166.6 million (EUR 114 million) in the first quarter of 2011. All of the company’s business segments recorded an increase in sales as group revenues grew 28 percent to $370.8 million (EUR 253.8 million).In March, Bulgari announced that it was being bought by LVMH Moët Hennessy Louis Vuitton in a deal valued at about $5.2 billion.Diamcor Raises Nearly $6 Million From Tiffany & Co. Diamcor Mining has raised $5.5 million from Tiffany & Co. to expedite development of the Krone-Endora project at its Venetia diamond mine. The funding, which took the form of a $3.5 million loan and $2 million debt debenture, was closed through a strategic off-take agreement with Tiffany’s sourcing and polishing subsidiary, Laurelton Diamonds South Africa. In return, Laurelton secured the first right of refusal to purchase the rough diamond production from Krone-Endora at fair market value prices, which will be negotiated and adjusted periodically. Diamcor will have the right to market any production that is not selected for purchase by Laurelton to the open market. James Fernandez, Tiffany’s executive vice president and chief financial officer (CFO), explained that the transaction is consistent with Tiffany’s ongoing vertical integration program to expand its sources of supply for diamonds. Diamcor completed its acquisition of Krone-Endora from De Beers Consolidated Mines (DBCM) in February and has begun the initial work associated with the start of extended drilling and bulk sampling programs. LVMH’s Watch, Jewelry Sales IncreaseSales of watches and jewelry at LVMH Moët Hennessy Louis Vuitton rose 20 percent year on year to $371 million (EUR 261 million) during the first fiscal quarter that ended on March 31, 3011. Total company revenue rose 14 percent to $7.46 billion (EUR 5.25 billion).
The watches and jewelry business group was supported by the performance of its own boutiques as well as that of its multi-brand retail stores, such as De Beers Diamond Jewellery. The LVMH Group considered its revenue growth across all categories an excellent start to the year, with the U.S., Europe and Asia showing strong momentum.U.S. Department Store Sales Fall U.S. department store sales fell 4.2 percent year on year in March to $14.2 billion, according to the U.S. Commerce Department. Meanwhile, retail trade sales jumped 7.3 percent from March 2010, the U.S. Census Bureau reported. Retail sales for all categories also rose by more than 7 percent year on year to $389.3 billion. In a separate report, the National Retail Federation (NRF) reported that retail sales, excluding automobile, gas station and restaurant sales, rose 3.9 percent against March 2010.Consumers appeared eager to take advantage of spring promotions, according to NRF’s president, Matthew Shay. “While current indicators point to a more confident consumer, increasing gas prices and a cramped job market could hamper consumer spending during the upcoming summer months, a key time of year for retailers,” he said.Article from the Rapaport Magazine - May 2011. To subscribe click here.
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