Rapaport Magazine

Retail Bulletin

Consumer Confidence Drops

   The Conference Board Consumer Confidence Index® fell again in December, following a decline in November. The Index now stands at 65.1, down from 71.5 last month. The Expectations Index declined sharply to 66.5 from 80.9. The Present Situation Index increased to 62.8 from 57.4 last month.
   U.S. consumers’ reactions were mixed regarding the current and long-term outlooks.
  • Consumers stating business conditions are good rose to 17.1 percent from
    14.6 percent.
  • Consumers stating business conditions are bad decreased to 27.3 percent
    from 31.2 percent.
  • Consumers expecting business conditions to improve over the next six months declined to 17.6 percent from 21.3 percent.
  • Consumers expecting business conditions to worsen increased to 21.5 percent
    from 15.8 percent.
U.S. Jewelry CPI Falls
   The U.S. consumer price index (CPI) for jewelry fell 2 percent year on year in November to 177.7 points. The index was 1.52 points lower than October’s reading.
   Nonetheless, the CPI remains at historically high levels and November’s measure
marked 23 consecutive months of a reading over 170 points. The CPI reached a record
185 points in January, but since then, prices for polished diamonds, gold and platinum have remained under pressure.

   For all product categories combined, the CPI rose 1.8 percent year on year in November to 231.03 points, slightly lower than the record high set in October and the lowest reading in two months.


NRF Supports Bill Avoiding Fiscal Cliff
   The National Retail Federation (NRF) said the agreement to avoid the fiscal cliff “gives American consumers and businesses the certainty they need to put worries over this issue behind them and get on with the business of growing our economy and creating jobs.”
   According to the NRF, failure to reach an agreement would have resulted in “devastating consequences.” Matthew Shaw, NRF’s president and CEO, noted, “With the economy still recovering, taking hundreds of billions of dollars out of consumers’ hands was a risk we could not afford to take.”
   If the tax hikes and spending cuts that make up the fiscal cliff had been allowed to go through, retail sales in 2013 would have been flat for the year, with negative growth in
the first half of the year, according to an analysis conducted by NRF’s chief economist,
Jack Kleinhenz, in collaboration with the economics firm Macroeconomic Advisors.

Tiffany & Co., Peretti Renew Deal
   Tiffany & Co. entered into an amended and restated agreement with jewelry designer
Elsa Peretti, which extends their business partnership for 20 years. The agreement, which reflects the long-standing rights and marketing and royalty obligations of both parties, grants Tiffany & Co. an exclusive license in all of the countries in which Peretti-designed jewelry and products are currently sold. Tiffany & Co. also made a $47 million one-time payment to Peretti.

   Peretti retains ownership of the intellectual property and exercises approval and consultation rights with respect to important aspects of the promotion, display, manufacture and merchandising of licensed products. Peretti will also receive royalties for use of the Peretti intellectual property and fees in respect of certain quality-control services Peretti has committed to providing pursuant to the agreement.
   The agreement further requires Tiffany & Co. to display the licensed products in stores, to devote a portion of its advertising budget to the promotion of the licensed products, to increase the inventory of nonjewelry licensed products and to take certain actions to protect the use and registration of the Peretti intellectual property.

Harry Winston Profit Jumps
   Harry Winston Diamond Corporation reported that luxury brand segment sales rose
14 percent to $95.6 million, while units sold increased by 8 percent. Operating profit
for the luxury brand segment increased 265 percent to $5.3 million.

   The company noted that new Harry Winston salons in China have significantly
improved the distribution network for the brand. In August, the company opened a new directly operated salon in Harrods in London and another is expected to open early this year in Geneva. In addition, the company plans to open a new licensed salon in Kuwait City, during the first quarter of the next fiscal year. Harry Winston plans to expand by
15 wholesale watch doors to 216 doors by the end of fiscal 2013.

   Robert Gannicott, the chairman and CEO of Harry Winston, said, “This has been
a quarter of solid progress on many fronts for us. Our luxury brand business has demonstrated strong growth in its bridal jewelry sales, with the higher margins and broader base.” He added, “Optimism returns in the U.S., still the world’s largest consumer of diamond jewelry.”

   The company also announced the appointment of Chuck Strahl to its board of
directors. Strahl recently retired from almost 18 years in federal politics, having
served as both the Canadian minister of transport and minister of aboriginal affairs
and northern development. 

Article from the Rapaport Magazine - January 2013. To subscribe click here.

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