IDEX Online Research: U.S. Jewelry Sales Weak in AprilJune 28, 12
(IDEX Online News) –
The full analysis is available here.
Three key factors had a negative impact on
· Timing of Mother’s Day Was Later This Year – Much of the weakness in April was related to the timing of Mother’s Day – later in May this year – and related promotions which were launched in early May this year, rather than in late-April, as is usual.
· Difficult Sales Comparisons – Sales comparisons were particularly difficult in April. Last year’s April (2011) jewelry sales gain of 15 percent was the largest monthly gain during 2011, making this April’s sales comparison the most difficult of the year.
· Weakening Economic Activity – Jewelry demand in April also reflects weakness in consumer spending, which is tied closely to economic activity. Earlier this year, there were encouraging signs about the near-term potential growth of the American economy. However, recent news has been less encouraging, and jewelry demand has suffered.
Specialty Jewelers’ Sales Decline Sharply
Sales at specialty jewelers declined by a dramatic 9.3 percent in April, compared to the same month a year ago, while jewelry sales at other merchants – mostly multi-line discounters – were up by an estimated 8.5 percent.
The disparity reflects the highly seasonal nature of specialty jewelers’ sales, which are driven by specific calendar events such as Mother’s Day, Valentine’s and Christmas. Jewelry sales at other merchants – mostly multi-line discounters – are far less seasonal, since a majority of these sales is fashion jewelry purchased on impulse.
April Jewelry Sales Highlights
The following table summarizes fine jewelry and watch sales trends as well as retail sales trends in the
Source: US Dept of Commerce
Here are some high-level sales trends that occurred in the jewelry industry in April 2012:
· Jewelry lost significant market share in April – Total retail sales in the U.S. market were up nearly 4 percent, and total retail sales, ex-auto, were up 3 percent. Total jewelry sales were barely up: +0.7 percent. Thus, jewelry lost “share of shoppers’ wallet” in the month. After strong sales gains in earlier this year, it appears that consumers slowed their spending on jewelry.
· Specialty jewelers lost market share to other merchants – Specialty jewelers, with a sales decline of 9.3 percent, lost market share to other merchants – multi-line discounters, mass marketers and online sellers – who sell jewelry. These “other” merchants posted an estimated 8.5 percent gain in jewelry sales in April.
· Jewelry / watch sales mix unchanged in April – Total jewelry (ex-watches) sales were up 1.0 percent in April. Jewelry sales (ex-watches) represented about 87 percent of total jewelry and watch sales, in line with historical levels. Branded jewelry sales declined sharply by 16 percent in April, according to data from the LGI Network. We believe consumers are telling the industry that “fashion” trumps “brands.” Branded jewelry sales have been flat or down for six of the past eight months; this is in contrast to stronger sales trends for unbranded jewelry.
· Watch sales weakened – Watch sales, which were down 1.1 percent in April, were weaker than total jewelry sales. Data from the LGI Network also reflects similar weakness: LGI watch sales were down 2 percent, on a same-store basis during April.
· Specialty jewelers’ sample confirms weak jewelry demand in April – April’s slowing sales trends were also confirmed by InStore magazine’s Brain Squad: only 42 percent of the jewelers reported an increase in sales, down from February’s 59 percent and March’s 53 percent.
The graph below summarizes recent monthly fine jewelry and watch sales trends for the
Source: US Dept of Commerce
Forecast: We’ve Scaled Back Our Outlook
The graph below summarizes our sales forecast for the
Source: US Dept of Commerce & IDEX Online
We note that management at Tiffany & Co. also scaled back their sales forecast for 2012. The company had been looking forward to a 10 percent global sales gain; it now calls for a gain of 7-8 percent for the year.
May Sales Could Be Strong
After disappointing April sales, we expect May jewelry sales to show solid gains due to a later Mother’s Day. Both Zale and