The improving economy and continued employment growth in the U.S. have Americans looking past the news of the day to go out and spend money. In Asia, the revival in the Chinese consumer market seems to be picking up as large retailers there report strong sales gains.
U.S. consumer confidence edged upward in January, though a significant percentage of Americans remain ambivalent, probably over the long-term effects of the tax bill that took effect at the beginning of the year, according to the Conference Board’s monthly Consumer Confidence Survey.
“Overall, however, consumers remain quite confident that the solid pace of growth seen in late 2017 will continue into 2018,” the board said.
Tiffany & Co, reported an overall sales gain of 8% in its holiday sales report, with same-store revenues up 6% in the U.S. and 7% in Asia, noting that some “exceptional high jewelry creations” helped sales increase. The company expects sales to continue trending upward “in the middle single digits,” but said that “evolving product offerings and customer service experience” will be necessary to sustain this growth.
In addition, LVMH, the luxury conglomerate which owns Cartier, Bulgari and a number of high-market watch brands, reported a 12% same-store sales increase in its jewelry and watch division. Sales were up strongly in every market, the company reported.
Sales of jewelry in China took a sharp upturn in December, totaling just under $5 billion, nearly $1 billion higher than each of the previous six months, according to government statistics. The major Chinese jewelry retailers reported 5% to 12% growth in same store sales during the third quarter, following nearly two years of sales declines, and are generally expected to match or exceed those results when the year-end results are announced.
De Beers’ first cycle of the year totaled $665 million, which includes sights and other sales. Typically for January, it was a large allocation that was readily absorbed into the market after a successful fall season that saw some reductions in rough and polished inventories and improved cash flow that eased pressure from banks. The total was down significantly from the January 2017 cycle of $729 million, but De Beers’ CEO Bruce Cleaver noted that last year’s numbers were boosted by the take up of goods that had been deferred because of India’s demonetization of larger denomination rupee notes.
De Beers’ diamond production increased 22% to 33.5 million carats (valued at about $5.7 billion) last year after the opening of its Gahcho Kue mine in Canada and restoration of full production at Orapa in Botswana, the company announced. De Beers’ total rough sales came to 35.1 million carats as it marketed goods that were deferred from 2016. The discrepancy between De Beers’ rough production and sales may rise this year after it announced it would auction rough diamonds consigned by other mining companies.
Alrosa remained the world’s largest diamond producer by volume, mining 39.6 million carats, though, like De Beers, it sold about 1.5 million carats it had previously stockpiled. Its output rose 6% last year, despite a disastrous flood at Mir Mine that killed eight workers and forced the closure of its operations. Mir produced higher-value diamonds and its closure will likely result in a lower average per carat price for Alrosa’s production this year. The accident also postponed Alrosa’s plans to further privatize the company, reducing the government stake from 43.9% to 29%.
Reports from the Tucson gem shows indicate that demand for higher quality gems, untreated in particular, and popularly priced stones was strong, with the middle market remaining weak.
Demand for ruby, sapphire and emerald was good, according to trade press reports, though prices have declined because of increasing supplies.
With the growth in the market for distinctive jewelry at affordable prices, calls for amethyst, citrine, blue topaz and other less expensive gems have increased. Additionally, the market for unusual gemstones from designers who create limited or one-of-a-kind pieces is strong.
The Centurion Show in nearby Scottsdale saw lighter traffic, but much stronger buying than last year. Exhibitors noted that retailers seemed much more confident of a good year at this show.