Russell Shor, Senior Industry Analyst
Russell Shor, Senior Industry Analyst
Slower-than-expected holiday retail jewelry sales in the U.S. have prompted rumors of a possible takeover of an industry icon.
Tiffany reported a worldwide sales increase of 4%, at the low end of its expectations, but its U.S. same-store sales stayed even with the previous year. Factoring out Internet and catalog trading, the retailer’s overall sales were down 2%. Only stores in its Asia division saw a real sales increase: same-store sales were up 7%.
The challenging environment for jewelry sales prompted a renewal of takeover rumors as Tiffany’s stock price slumped after these announcements. In 2008, slowing sales conjured rumors that a luxury conglomerate, such as Richemont (owner of Cartier) or LVMH (partners in De Beers retail operations), would take over Tiffany & Co., a publicly traded but independent corporation. The company has not commented on the rumors.
Tiffany was not the only large jewelry retailer affected by a slow fall season, which is critical for U.S. jewelers because 35-40% of sales are typically made in the final nine weeks of the year.
Signet Jewelers, the parent company of Kay Jewelers and Jared the Galleria of Jewelry, reported a same-store sales increase of 4.7% in the U.S. for the nine-week season, compared to an increase of 9.2% for the same period last year. Zale Corp. reported a same-store increase of 2.3% for the season.
Other reports indicate that demand for diamond jewelry rose very little over the previous year and that American consumers were trading down on diamond quality. One bright spot, according to the Centurion newsletter, is that the independent luxury jewelers it surveyed generally had a strong holiday season. Half of the respondents saw double-digit sales increases, while another 13.9% posted smaller gains. On a discouraging note, the percentage of luxury jewelers reporting sales declines (26.4%) increased substantially from the previous year.
The buying season for China’s New Year (Feb. 10) is still a month away, but the nation’s economy slowed considerably during the second half of 2012, leaving jewelry demand in doubt. In India, buying at the year-opening UBM Mumbai show was cautious.
All eyes will be focused on the Jan. 21–24 De Beers sight. December’s allocation was a larger-than-expected $495 million. January’s sight is typically the largest, with few price breaks. But with the trade still concerned over soft prices and the legal battle between a major diamond firm, Arjav, and its main creditor, ABN AMRO Bank, many manufacturers hope De Beers takes the cautious road with smaller sights and stable prices until the direction of the 2013 world economy becomes clearer.
Following the unrest that beset South Africa’s mining sector last year, Anglo American Corporation announced major cutbacks at its giant Rustenburg platinum mining complex. The company, which assumed a majority interest in De Beers last year, said it would close four shafts at Rustenburg and eliminate 14,000 jobs because the shafts had become unprofitable to operate. The company pledged to create a similar number of jobs in other areas and said the affected workers would be provided a support package.
Anglo fired 12,000 Rustenburg workers during a series of strikes last October, but rehired them several weeks later after negotiations with the unions.
Russell Shor, Senior Industry Analyst
Russell Shor, Senior Industry Analyst
Slower-than-expected holiday retail jewelry sales in the U.S. have prompted rumors of a possible takeover of an industry icon.
Tiffany reported a worldwide sales increase of 4%, at the low end of its expectations, but its U.S. same-store sales stayed even with the previous year. Factoring out Internet and catalog trading, the retailer’s overall sales were down 2%. Only stores in its Asia division saw a real sales increase: same-store sales were up 7%.
The challenging environment for jewelry sales prompted a renewal of takeover rumors as Tiffany’s stock price slumped after these announcements. In 2008, slowing sales conjured rumors that a luxury conglomerate, such as Richemont (owner of Cartier) or LVMH (partners in De Beers retail operations), would take over Tiffany & Co., a publicly traded but independent corporation. The company has not commented on the rumors.
Tiffany was not the only large jewelry retailer affected by a slow fall season, which is critical for U.S. jewelers because 35-40% of sales are typically made in the final nine weeks of the year.
Signet Jewelers, the parent company of Kay Jewelers and Jared the Galleria of Jewelry, reported a same-store sales increase of 4.7% in the U.S. for the nine-week season, compared to an increase of 9.2% for the same period last year. Zale Corp. reported a same-store increase of 2.3% for the season.
Other reports indicate that demand for diamond jewelry rose very little over the previous year and that American consumers were trading down on diamond quality. One bright spot, according to the Centurion newsletter, is that the independent luxury jewelers it surveyed generally had a strong holiday season. Half of the respondents saw double-digit sales increases, while another 13.9% posted smaller gains. On a discouraging note, the percentage of luxury jewelers reporting sales declines (26.4%) increased substantially from the previous year.
The buying season for China’s New Year (Feb. 10) is still a month away, but the nation’s economy slowed considerably during the second half of 2012, leaving jewelry demand in doubt. In India, buying at the year-opening UBM Mumbai show was cautious.
All eyes will be focused on the Jan. 21–24 De Beers sight. December’s allocation was a larger-than-expected $495 million. January’s sight is typically the largest, with few price breaks. But with the trade still concerned over soft prices and the legal battle between a major diamond firm, Arjav, and its main creditor, ABN AMRO Bank, many manufacturers hope De Beers takes the cautious road with smaller sights and stable prices until the direction of the 2013 world economy becomes clearer.
Following the unrest that beset South Africa’s mining sector last year, Anglo American Corporation announced major cutbacks at its giant Rustenburg platinum mining complex. The company, which assumed a majority interest in De Beers last year, said it would close four shafts at Rustenburg and eliminate 14,000 jobs because the shafts had become unprofitable to operate. The company pledged to create a similar number of jobs in other areas and said the affected workers would be provided a support package.
Anglo fired 12,000 Rustenburg workers during a series of strikes last October, but rehired them several weeks later after negotiations with the unions.
