(IDEX Online) - The number of U.S. retail jewelers who filed for bankruptcy in the first nine months of 2010 has fallen by 38 percent from the same period in the prior year, according to the latest data from the Jewelers Board of Trade (JBT). In the first three quarters of 2010, 36 specialty jewelers filed for bankruptcy. Last year, 58 jewelry merchants went bankrupt in the same nine-month period.

 

Further, the number of U.S. retail jewelers is expected to decline by only about 200 firms this year, the smallest drop since early in the decade.

 

Bankruptcies Down Among Jewelry Suppliers

Among jewelry wholesalers, three filed for bankruptcy in the first nine months of 2010, a dramatic decline from last year’s nine wholesales who went bankrupt in the same period.

 

There has been a more modest decline in the number of jewelry manufacturers in the U.S. market who filed for bankruptcy in 2010, according to JBT. For the first three quarters of 2010, 11 jewelry producers went bankrupt, down only slightly from last year’s 13 manufacturers who filed for bankruptcy.

 

Overall, bankruptcies in the jewelry industry, including retailers, wholesalers, and manufacturers, have fallen by 40 percent in the first three quarters of 2010 versus the same period a year ago. The JBT data shows that 50 firms filed for bankruptcy in the first nine months of 2010 as compared to 83 firms in the same period of 2009.

 

Business Discontinuances Down Slightly

The Jewelers Board of Trade aggregates business discontinuances for all categories – jewelry retailers, wholesalers and manufacturers. While this tally shows that bankruptcies are down, the number of merchants who “ceased operations” is about flat for the first nine months of the year. Like bankruptcies, “consolidations” – sale or merger – are also down somewhat.

 

The following table summarizes jewelry business discontinuances for the first nine months of 2010 versus the same nine-month period in 2009.

 

Type of Discontinuance 9 Months 2010 9 Months 2009 Ceased Operations 1,387 1,374 Consolidations (Sale/Merger 81 121 Bankruptcies 50 83

Industry Credit Improving

The Jewelers Board of Trade measures industry credit trends among retailers, based on collection attempts by its supplier members. The news is good across the board: the number of supplier claims is down substantially, the average amount of the claim has fallen and fewer retail merchants have had their credit rating reduced in 2010.

 

The following table illustrates the improvement in credit quality among retail jewelers in the U.S. market.

 

Credit Ratings & Claims 9 Months 2010 9 Months 2009 Ratings Increases 6,139 5,960 Ratings Decreases 5,913 7,509 Supplier Claims Against Merchants 1,713 2,641 Average Claim Size $7,386 $8,651

Modest Decline in Retail Firms

The Jewelers Board of Trade maintains a census of jewelry retailers, wholesalers and manufacturers. It counts firms, not doors.

 

According to the latest JBT data, there were 22,094 specialty jewelry retail firms in the U.S., down only modestly from last year’s 22,251 at the end of the third calendar quarter. Thus, the U.S. retail jewelry industry has lost a net (openings minus closings) of only 157 firms over the past year. At the end of the third quarter of 2009, the net number of retail jewelry firms in the U.S. had dropped by 476 from the prior year.

 

Based on current trends, it is likely that the number of jewelry retail firms will decline by a net of 200 or fewer firms in 2010, one of the most modest reductions in the past couple of decades. This represents less than a one percent decline in total jewelry retail firms in the U.S. market. In 2008, the industry lost a net of over 800 retail firms; in 2009, it lost a net of over 400 retailers.

 

Clearly, the recession has taken out the weakest merchants. Those who remain generally appear to have the financial strength to continue doing business over the long term.