Two of the leading jewellers in the U.S. posted solid growth Tuesday as the economy is beginning show actual long-term positive gains, even though it is still much too sluggish.
The reports indicate that heading into the all-important Christmas season, consumers may be opening up their wallets just a little bit more to buy something a little more special, such as jewellery, for their loved ones. Of course, Internet sales will continue to take an increased share of overall holiday sales.
One thing that could tarnish this optimism and hurt sales is the devastation from Hurricane Sandy, which wreaked havoc on the most populous part of the U.S. (New York and New Jersey) and spread its wrath well inland.
Despite this, the National Retail Federation, the national trade association for retailers, reported that holiday sales this year will increase 4.1 percent to $586.1 billion and that 22.5 percent of shoppers surveyed are expected to buy jewellery as a gift, the highest amount since 2007. The organization has not adjusted its findings for Sandy as of yet.
Meanwhile, two of the largest jewellers in the U.S. posted positive results and are optimistic about the upcoming season.
Signet Jewelers, the largest specialty jeweller in the U.S. and U.K., said that in its U.S. division, by far its largest contributor, third quarter sales were up 2.2 percent, year-over-year, to $575.6 million. Same store sales for the period increased 1.2 percent, driven primarily by its largest branded store chain, Kay jewelers, which posted a same store sales increase of 5.5 percent.
Kay jewelers posted a same store sales increase of 5.5 percent for its parent Signet Jewelers.
Same store sales at Jared (its second largest jewellery brand) declined 4.1 percent, primarily due to a one-time watch event in Fiscal 2012 and discontinuation of the associated watch line. The loss of these sales reduced Jared same store sales by approximately 9.6 percent and total US same store sales by 3.5 percent. Across both brands, same store sales were driven by branded and exclusive merchandise. Net income jumped 34 percent to $34.9 million. The company said that current expectations for fourth quarter same store sales are in the low single-digit on a 53-week basis and low-to-mid single-digits on a 52-week basis. The current fiscal year is one week longer than prior fiscal year.
Zale Corp., which owns a number of jewellery retail brands in the U.S. and Canada, said same store sales increased 3.9 percent in the first quarter of its fiscal year for its U.S. fine Jewellery brands consisting of Zales Jewelers, Zales Outlet and Gordon's Jewelers. Piercing Pagoda, its Kiosk Jewellery business, posted same store sales increase of 2 percent. Total revenue, which includes its smaller Canada business, increased 1.8 percent to $357 million. In its outlook, the company made a brief statement saying that it expects to "achieve positive net income for fiscal year 2013."
