RAPAPORT… U.S. Jewelry CPI Sets Record
The U.S. consumer price index (CPI) for jewelry hit yet another record high in 2011, this time for the month of April. The CPI jumped 9.6 percent year on year to 165.58 points. The jewelry price index is based on the reference point of average prices in 1986, which is set at 100 points.
Meanwhile, the CPI for all product categories rose 3.1 percent year on year in April to 224.43 points, signaling again that inflation is impacting the consumer markets in the U.S. The base period for that overall reading was provided by an average of 100 points taken from 1982 to 1984.
Signet’s Sales, Profits Rise
Signet Jewelers posted record sales in the first fiscal quarter, driven by growth in its U.S. businesses. Total sales rose 10.2 percent year on year to $887.3 million in the three months that ended on April 30, 2011, with same-store sales up 10.2 percent. Net income jumped 50 percent to $75.4 million.
U.S. sales increased 11.4 percent to $738 million as average prices grew 12.1 percent. The strongest growth of 13.4 percent was seen at Kay Jewelers, where the average price per item was $360, while sales at Jared The Galleria of Jewelry rose 12.7 percent with an average price of $798. Sales at the U.K. division, consisting of H. Samuel and Ernest Jones, rose 4.5 percent to $149.3 million, but fell 1.3 percent when measured at constant exchange rates.
“The strong sales momentum has continued into the start of the second quarter and our focus remains on enhancing our sustainable competitive advantages, improving our execution and maintaining financial flexibility,” said Mike Barnes, Signet’s new chief executive officer (CEO). “We remain well positioned to continue to increase sales productivity and achieve our financial objectives for this year.”
Zale’s Sales Up
Zale reported a 15 percent year-on-year increase in revenue to $411.8 billion during the third fiscal quarter that ended on April 30, 2011, the second consecutive quarter of growth after three years of falling revenue. Comparable-store sales rose 15 percent. Zale recorded a net loss of just under $9 million compared with a net loss of $12 million one year go.
In other company news, Bank of America upgraded Zale from “neutral” to “buy,” with a $4.75 per share price target. Bank of America took this action in response to “recent positive trends across jewelry retailing.” Analysts stated that they were confident that Zale could meet its 10 percent comparable-store estimate during the third fiscal quarter. —Additional reporting by Acquire Media.
Tiffany & Co.’s Sales Climb
Tiffany & Co. reported that its sales increased by 20 percent year on year to $761 million for its first fiscal quarter that ended on April 30, 2011. Net earnings gained by 26 percent to $81.1 million from the $64.4 million posted one year ago. The company’s worldwide net sales rose 20 percent to $761 million, with the Asia-Pacific region posting the highest gain of 37 percent to $167.2 million.
Net sales in the Americas grew 19 percent to $374.7 million, with sales at Tiffany’s flagship New York store up 23 percent. In Europe, net sales jumped 25 percent to $85.6 million.
The company’s worldwide comparable-store sales grew 19 percent with Asia-Pacific again leading the way, racking up an increase of 26 percent, while comparable-store sales in the Americas rose by 17 percent and by 15 percent in Europe. Japan’s comparable-store sales were up 8 percent.
Michael J. Kowalski, the company’s chairman and chief executive officer (CEO), said, “Worldwide sales growth in the early part of this second quarter is continuing to exceed our expectation, with solid performance in most regions.”
Sotheby’s Revenue, Profits Jump
Sotheby’s revenue increased 17 percent to $119.6 million for the first quarter that ended on March 31, 2011. Sotheby’s reported net income of $2.4 million was up from a net loss of $2.2 million posted for the first quarter of 2010.
“This is one of our best first quarters on record,” said Bill Ruprecht, president of Sotheby’s, noting that year-to-date sales were already running 31 percent higher, continuing the positive momentum into the second quarter.
Richemont Jewelry’s Sales Soar
Richemont closed a strong fiscal year spurred by record sales and profits at its jewelry maisons. Group sales rose 33 percent year on year to $9.84 billion (EUR 6.89 billion) for the fiscal year that ended on March 31, 2011, with growth recorded in all regions and product categories. Profits from continuing operations jumped 80 percent to $1.54 billion (EUR 1.08 billion).
The Swiss-based luxury group reported that sales at its jewelry maisons rose 29 percent to $4.96 billion (EUR 3.48 billion) with operating profits up 43 percent to $1.52 billion (EUR 1.06 billion).
Berkshire Hathaway’s Earnings Up
Berkshire Hathaway estimated a 17 percent year-on-year increase in net earnings in its manufacturing, service and retailing division, which includes the company’s jewelry brands. First-quarter net earnings are expected to be $558 million compared with $477 million one year ago.
Preliminary estimated first-quarter earnings are expected to be $1.5 billion, down from $3.6 billion the year before. Warren Buffett, chief executive officer (CEO), said the biggest factor in the losses related to disasters in Japan, Australia and New Zealand. “We probably had the second-worst quarter for the insurance industry in terms of disasters around the globe,” he stated.
Double Digit Rise for PPR
PPR’s luxury group division sales rose 26 percent year on year to $1.7 billion (EUR 1.13 billion) during the first fiscal quarter that ended on March 31, 2011. Total PPR Group sales rose 9 percent to $5.5 billion (EUR 3.71 billion) during the quarter.
Boucheron enjoyed double-digit sales growth, too, as PPR reported “buoyant performance” from the high-end jewelry market during the first fiscal quarter.
Luxury Drives Sales Increases
Leading research studies show that luxury helped spur sales increases in April. However, while sales climbed at luxury retailers, the U.S. Department of Commerce reported that April department stores sales dropped 1.9 percent to $15.3 billion on an adjusted basis compared with April 2010.
MasterCard Advisors’ SpendingPulse, a macroeconomic study tracking national retail and services sales, reported that April’s retail sales, excluding auto sales, grew by 8.8 percent year on year. But spending on gasoline helped drive overall sales figures higher. Retail sales, excluding both gasoline and autos, rose 6.7 percent year on year.
Sectors showing positive results in April included ecommerce, luxury, apparel, groceries and travel. Luxury spending rose for the seventh consecutive month, although the SpendingPulse Luxury Index, which measures sales in the high-end restaurant, food store, department store and general apparel categories, but excludes jewelry, rose 9.6 percent year on year. The research company did not provide separate jewelry results.
Online Retail Sales Rise
Online retail sales during the first quarter of 2011 in the U.S. rose 12 percent year on year to $38 billion, according to comScore Inc., a firm that measures ecommerce sales and trends. The increase represented the sixth consecutive quarter of positive growth and the second consecutive quarter of double-digit growth rates. “In the first quarter, the growth in ecommerce spending was roughly double that observed at offline retail,” noted comScore’s chairman, Gian Fulgoni.
QVC’s Jewelry Sales Down
QVC reported that its first-quarter revenue rose 4.4 percent year on year to $1.84 billion, with U.S. sales rising by 3.1 percent and international sales up 7 percent. Jewelry sales continued to decline, as they have for several quarters, while sales of electronics, beauty and accessories increased. The average selling price for the first quarter increased 7 percent to $54.83.
