Retail Bulletin

RAPAPORT…
Same-Store Sales Expected to Rise

Retail chain stores in the United States will experience a 2.5 percent increase in same-store sales in November and December 2007 compared to those months in 2006, according to Michael Niemira, director of research for the International Council of Shopping Centers (ICSC). Niemira predicted that a strengthened income on the part of U.S. consumers, along with a consumer confidence more accurately described as “neutral” than “negative,” will help boost sales. Encouraging this trend will be the heavy use of promotional tactics such as discounts and coupons by retailers trying to build up traffic for the holidays.

An early Hanukkah is likely to drive up sales earlier in the season, Niemira predicted. He also identified the weekend before Christmas as a likely time for heavy gift-buying partly because Christmas falls on a Tuesday this year. Holiday shopping will outlast the holidays, as gift cards drive purchases well into 2008. In 2007, Niemira noted, gift cards accounted for $15 billion to $20 billion in sales. He estimated that 30 to 40 percent of all redemptions took place the week after Christmas and in January.

In Niemira’s analysis, general merchandise, furniture, apparel and electronics, along with other categories such as hobbies, books and sporting goods, will undergo a 4.3 percent increase for November and December combined.
In spite of his overall prediction for the 2007 holidays and the weeks beyond, Niemira did cite a few factors exerting a detrimental effect on spending, such as a continuing weakness in the housing and mortgage markets of the United States.

Additional Reporting © International Council of Shopping Centers.
 

Analysts Upgrade Signet Stock

Shares in Signet Group, the specialty jewelry retailer, have risen nearly 3 percent from 4.63 cents to $1.73, partly as a result of an upgrade in Signet stock. The increase reverses a trend seen throughout most of 2007. Signet shares had fallen 30 percent so far this year.

The International Herald Tribune published a note by financial analyst Mal Patel stating that Signet’s long-term business model was unchanged in its fundamentals, and that the downside risks arising from its share levels are limited.

Costco Diamond Sales Up
 
During the fourth quarter of wholesale club Costco’s fiscal year 2007, full-year profits fell 2 percent to $1 billion, according to Costco’s chief financial officer Richard Galanti. In the same quarter, sales rose 7 percent to $63.09 billion. Galanti noted that while jewelry sales may have softened, the quantity of diamonds sold rose.

Costco does not break out jewelry or diamond sales as a separate item when reporting financial results.

Hong Kong Jewelry Sales Jump

Hong Kong retail sales grew 15 percent to $2.65 billion (HKD 20.6 billion) in August 2007. A rise in jewelry spending contributed greatly to the increase.
According to Chinese government spokespersons, growth in August was accelerated by rising incomes, tourist spending and better job prospects in Hong Kong.

Compared to August 2006, jewelry and watch sales rose 31.8 percent, second only to electronic equipment sales, which grew 37.7 percent. According to a report by Thomson Financial however, the total growth was slightly lower than the 15 percent forecast by economists polled by Thomson’s International Financing Review.

“The trend of higher retail sales will continue in coming months, especially in the last quarter because of the Christmas season,” The publication quoted Daniel Chan, a senior investment strategist at DBS Bank in Hong Kong, as saying.

The Hong Kong economy grew 6.3 percent in the first half of 2007.

Target Resources Raises Funds, Signs Tiffany Deal

Target Resources plc, a company that mines for diamonds and gold in Sierra Leone, announced a conditional placing and subscription of new shares to raise gross proceeds of $11.5 million (GBP 5.6 million). The company also signed a $5 million, five-year unsecured loan, along with an exclusive 10-year marketing deal – first announced on September 17 – with Tiffany & Co.
Target will use proceeds from the fundraising and the loan to furnish the mining equipment and infrastructure that Target and MinEx Group agreed were necessary to carry out mining plans in Sierra Leone. Nissam Levy, managing director for Target Resources, welcomed Tiffany as a strategic partner and said that thanks to the new deals, Target now has the means to make maximum use of its existing leases in Sierra Leone.

United States Online Jewelry Sales Surge

ComScore, an online research company, reported that online sales of jewelry rose 21 percent in the third quarter of 2007, making jewelry one of the fastest-growing sectors of internet sales. In the context of total September retail e-sales – excluding auctions and large corporate purchases – that grew 23 percent to $28.4 billion, online jewelry sales ranked ninth in growth. The top slot was occupied by video games, accessories and consoles, followed by consumer electronics, toys and hobbies, event tickets, and books and magazines. Exact sales figures for individual sectors were not released.

For the first nine months of 2007, total online retail sales increased 21 percent to $83.58 billion, compared to the same period last year. ComScore’s chairman, Gian Fulgoni, said that with online retail spending rising at rates over 20 percent from one year to another, the market is far from achieving maturity.

LVMH Reports Strong Growth in Luxury Sales

Luxury goods retail company LVMH Moet Hennessy Louis Vuitton reported revenues of approximately $16.42 billion (€ 11.4 billion) for the first nine months of 2007, an increase of 13 percent over the same period in 2006. Growth in the third quarter was particularly strong, according to company spokespersons. During the quarter, organic revenue growth reached 15 percent, a total the spokespersons called impressive in view of the considerable growth attained in the third quarter of 2006.

In the official announcement, the category “watches and jewelry” showed some of the strongest growth. Sales in the first nine months of 2007 totaled $5.89 billion, compared to $5.09 billion in the same period last year, an increase of 16 percent.

Sales at U.S. Chain Stores Edge Upward In September

Sales in September at U.S. chain stores rose 1.7 percent on a year-on-year comparison, according to the index of the International Council of Shopping Centers (ICSC). Sales of apparel were hurt during this period by unseasonally warm weather, an ICSC report said. The report quoted ICSC’s director of research, Michael Niemira, as saying that the fiscal year-to-date reading of 2.3 percent has seen a significant decline since last year’s reading of 3.6 percent.