RAPAPORT...
U.S. Online Sales Up
Online retail sales in the U.S. grew 12 percent to $32.8 billion for the first quarter of 2008, according to comScore. Year-over-year ecommerce sales were up 15 percent for April 2008, following a 9 percent increase in March. Gian Fulgoni, comScore’s chairman, stated that though growth rates are softer this year, the company hopes that April marks a turnaround in consumer spending.
China’s 2007 Jewelry Sales Hit $26 Billion
China’s jewelry sales reached $26 billion in 2007, representing growth of $2.9 billion a year since 2005, according to a report conducted by Research and Markets (R & M). The report, titled “China Gold & Silver Jewelry Market Channel Report, 2007-2008,” noted that the retail price index of China’s jewelry has risen continuously. In 2007, the country’s jewelry imports were up 35.6 percent to $6.2 billion, while exports increased 16.8 percent to $8 billion. By the end of 2007, there were over 10,000 jewelry retailers on mainland China. R & M compiled the report based on statistics provided by the Gems & Jewelry Trade Association of China (GAC), the China Gold Association, the Shanghai Diamond Exchange (SDE), the Ministry of Commerce, the National Bureaus of Statistics, provincial and municipal statistics bureaus and jewelry enterprises.
Tiffany Profits Beat ExpectationsTiffany & Co. reported higher-than-anticipated revenues for the first quarter of 2008-2009, driven by strong sales in the Asian Pacific and European markets. The jeweler’s net earnings for the three months ended April 30, 2008 were up 20 percent to $64.4 million, or $0.50 per share, compared with $53.8 million, or $0.39 per share, for the same period of 2007. Total sales increased 12 percent to $668.1 million, versus $595.7 million in 2007, while comparable store sales grew 3 percent. Comparable store sales in the U.S. equaled last year’s. Michael J. Kowalski, Tiffany’s chairman and chief executive officer (CEO), stated that the company would open 24 stores worldwide in 2008 in addition to the 192 it operated at the end of the reporting period. He forecasted that sales would grow approximately 10 percent in 2008 and net earnings per diluted share would increase to $2.80 to $2.90.
Standard & Poor’s Upgrades Sotheby’s
Standard & Poor’s (S & P) Rating Service raised its credit rating for Sotheby’s from “BB+” to “BBB-” and removed the jeweler’s ratings from CreditWatch.com, giving it a “stable” outlook. David Kuntz, an S & P credit analyst, explained that the improved rating returns Sotheby’s to investment-grade status after seven years. The upgrade is a reflection of the jeweler’s above-average credit protection profile and the repayment of $100 million in secured notes due by February 2009, according to Kuntz.
Harry Winston’s Sales SpikeHarry Winston Diamond Corporation saw a 10 percent sales increase to $156.1 million for the first quarter ended April 30, 2008, from $141.4 million in the same period of 2007. Net earnings for the period stood at $21.3 million, or $0.35 per share, compared to $3.3 million, or $0.06 cents per share, in the first quarter of last year. The jeweler’s retail sales rose 27 percent to $74.7 million, with U.S. sales increasing just 2 percent to $24.9 million. Harry Winston spokespersons claim the company is on track to boost sales by 15 percent this year.
Neiman Marcus Profits DownNeiman Marcus saw its quarterly profits fall 7 percent to $55.4 million for the three months ended April 26, 2008, compared with $59.5 million in the same period last year. Revenues from the luxury jeweler’s specialty stores dropped 1.6 percent to $893.6 million from $908 million in 2007, while its direct marketing rose 1.9 percent to $168.6 million. For the 39 weeks ended April 26, 2008, Neiman Marcus’ net earnings were up 40 percent to $178.5 million and total revenues reached $3.6 billion, a 4.7 percent increase over last year’s $3.4 million. Comparable store sales grew 2.6 percent.
Movado’s Profits HalvedMovado Group’s profits were halved in the first quarter of fiscal 2009, with its net income declining 50 percent to $1.2 million for the three months ended April 31, 2008, compared to $2.4 million for the same period of 2007. Earnings per share were down 44 percent to $0.05 from $0.09 per share last year, while net sales were up 2.7 percent at $101.4 million, excluding the sale of discontinued products. Movado maintained its fiscal 2009 net sales range of $555 million to $565 million.
Finlay Extends Losses in First QuarterFinlay Enterprises reported a net loss of $11 million, or $1.19 per share, from continuing operations for the first quarter of fiscal 2008, compared with a loss of $7.8 million, or $0.86 per share, for the same period of 2007. The loss came despite a 26 percent sales increase to $205.1 million for the period.
Standards & Poor’s (S & P) lowered its rating for Finlay Enterprises and its subsidiary Finlay Fine Jewelry Corp. from a “B-” to a “CCC” in the wake of these results.
Birks & Mayors Profits DownMontreal-based jewelry retailer Birks & Mayors reported “disappointing” fourth quarter and full fiscal 2008 results, impacted by slow economic conditions in North America, according to Tom Andruskevich, Birks & Mayors’ president and chief executive officer (CEO). Operating loss during the fourth quarter ended March 29, 2008 widened to $7.7 million, from $2.4 million a year earlier. The company nevertheless moved into the black for the quarter in posting a net income of $3.3 million, compared with a previous net loss of $1.9 million.
Birks & Mayors said it expected fiscal 2009 sales to increase in the low single digit percentage range, while gross margins are projected to increase modestly.
Richemont’s Sales RiseRichemont SA’s fiscal-year sales rose 10 percent to $8.9 billion, while its profits increased 18.3 percent to $2.4 billion for the 12 months ended March 31, 2008. Sales growth was prevented by the weak dollar against the euro and decreased consumer spending in the U.S. Richemont plans to restructure into two separate companies: a luxury business based in Switzerland and an investment fund in Luxembourg.
Whitehall Files for Chapter 11 Protection
Chicago-based Whitehall Jewelers Holdings Inc. filed for Chapter 11 protection and will soon put its assets on the block. The company explained in a statement that it had filed for bankruptcy protection along with its diamond retail business, Whitehall Jewelers, while it was implementing its reorganization plan. Whitehall also secured an $80 million debtor-in-possession (DIP) credit facility from the Bank of America, Wells Fargo Retail Finance and GMAC Commercial Finance to replace the company’s previous $125 million revolving credit facility.
Signet Secures $520 Million Credit Facility
Signet Group entered into a $520 million unsecured multicurrency, five-year revolving credit facility agreement. This replaces the company’s $390 million facility, which was due to expire in September 2009. The participating banks are Barclays Capital, Fifth Third Bank, HSBC, The Royal Bank of Scotland, ABN Amro and National City Bank.
Article from the Rapaport Magazine - July 2008. To subscribe click here.