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UK Jewelers Weather Brexit Uncertainty
Aug 28, 2017 8:47 AM
By David Brough
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RAPAPORT... 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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