RAPAPORT... CPI for Jewelry UpThe consumer price index (CPI) for jewelry rose 9 percent to 156.6 points in July, according to statistics provided by the U.S. Bureau of Labor Statistics (BLS). When combining both the watch and jewelry categories, the year-to-year increase was 8 percent. July’s jewelry price index rose 3 points from June 2008 and is up 11 points since January. During the January to July 2007 cycle, the index averaged about 141 points, but this year it has risen to an average of 152. January registered 145.6 points, the lowest total so far this year. The BLS bases its jewelry price index on 100 basis points derived in December 1986.
Zale Posts Net Loss
Zale Corporation reported a net loss of $4.9 million for its fiscal fourth quarter ended July 31, 2008, compared with a $1.5 million profit one year ago. Revenues rose 5.7 percent to $456.2 million and the jeweler’s same-store sales increased 6 percent. Sales for fiscal year 2008 fell 0.7 percent to $2.1 billion, with profits down 82 percent to $10.8 million. Same-store sales declined 0.7 percent. The company predicted full-year earnings per share of $1.10 to $.125.
Tiffany Downgraded to “Sell”Banc of America Securities downgraded Tiffany & Co. shares to “sell,” stating that the jeweler’s U.S. sales would be hurt by an expected drop in tourism. Tiffany’s New York flagship store accounts for 20 percent of its U.S. sales, per Dana Cohen, a Banc of America analyst, but international traffic to and from the Big Apple is expected to decline 19 percent by the second quarter of 2009. Cohen added that the decline would become evident at the beginning of the second half of the firm’s fiscal 2008 to 2009 and continue into next year. The second fiscal quarter ended July 31, 2008, however, which Tiffany reports on next month, should be fine, per Cohen, who lowered her price target by $6 to $33.
Friedman’s Seeks Reorganization Extension
Friedman’s Inc. asked the U. S. Bankruptcy Court for a 60-day extension on filing a plan to close its Chapter 11 case. Though Great American and Retail Consulting Services recently managed the liquidation of the firm’s Friedman’s and Crescent Jewelers, lawyers for the company cited numerous complications in the bankruptcy case, including inadequate time to resolve creditor issues and draft a reorganization plan. A hearing is scheduled for September 5. If the court approves the request, Friedman’s could hold off filing a plan until November 24.
Bulgari’s Profits DecreaseNet profits at luxury retailer Bulgari dropped 8.8 percent to $47.1 million (EUR 31.4 million) in the second quarter of 2008 in the wake of higher operating costs, a slump in watch sales and a 21 percent drop in revenues in the Americas to $60.2 million (EUR 38.5 million). Total second-quarter revenues grew 4.8 percent to $412.1 million (EUR 274.7 million). Jewelry revenues increased 5.2 percent to $276.3 million (EUR 118.3 million), while revenues from watches sank 11 percent to $102.1 million (EUR 65.6 million). The firm limited its growth forecast for the second half of the year due to what spokespersons termed “difficult macroeconomic conditions.”
Sotheby’s Revenues DownSotheby’s second-quarter revenues decreased 5.6 percent to $320.2 million for the three months ended June 30, 2008, while net income dropped 11 percent to $95.3 million. For the first six months of 2008, aggregate auction sales were $3 billion, a record for Sotheby’s, but revenues then shrank 8 percent to $449.4 million. Net income for the first half fell 37 percent to $82.9 million.
Birks & Mayors Reduces LossBirks & Mayors, a luxury jeweler with stores in Canada and the U.S., reported that its net loss narrowed by 6.9 percent to $1.9 million during the first quarter of fiscal 2009, a decrease company spokespersons attributed to an increase in sales. The company’s operating loss improved 39.5 percent to $29,000 for the three months ended June 28, 2008, while its net sales increased 6.4 percent to $72.4 million. Overall comparable store sales fell 5 percent. Comparable store sales rose 2 percent in Canada and declined 11 percent in the U.S. Birks & Mayors maintained that net sales would grow in the low single digit percentage range for the year, while the gross margin rate was projected to increase very modestly for the year.
Signet Sales DropSignet Group’s sales fell 1.9 percent during its second quarter ended August 2, 2008 to $768.6 million at constant exchange rates. Same-store sales declined 3 percent during the period. Sales in the U.S. shrank 1.6 percent to $575.4 million and same-store sales dropped 5.8 percent. For the half year ended August 2, group sales decreased 0.5 percent to $1.6 billion. Sales in the U.S. dropped 0.9 percent to $1.2 billion.
Signet will make the New York Stock Exchange (NYSE), rather than the London Stock Exchange, its primary listing effective September 11, 2008, per company spokespersons. Shareholders also approved moving the company’s home base to Bermuda.
Finlay Specialty Sales SurgeFinlay Enterprises Inc. reported that specialty jewelry stores Carlyle, Congress and Bailey Banks & Biddle contributed sales of $74.8 million for the quarter ended August 2, 2008, almost three times the amount contributed one year ago. Overall company sales rose 28.8 percent to $190.6 million, while same-store sales dropped 4.8 percent. Sales for the half year ended August 2 rose 27.3 percent to $395.7 million, with specialty jewelry stores contributing $152.5 million of this total. Same-store sales fell 4.6 percent for the period.
One week later, Finlay stated that its net loss grew 6.4 percent to $12.3 million in its second fiscal quarter. For the group’s first half, the company’s net loss grew 6 percent to $23.3 million. Company sales rose 27 percent to $395.7 million. Specialty stores contributed sales of $152.6 million for the first fiscal half, up from $54.3 million in 2007, before it owned Bailey Banks & Biddle.
ShopNBC Widens Net LossWeak consumer spending hit ShopNBC hard during its second quarter ended August 2, 2008 as the company’s net loss rose 191 percent to $15.7 million. Sales fell 26 percent to $142 million during the period, while operating expenses were down by 11 percent. In the wake of these results, the company’s board of directors appointed John D. Buck as chief executive officer (CEO), replacing Rene Aiu. The company also announced the departures of Glenn Leidahl, chief operations officer (COO), Terry Curtis, senior vice president of customer analytics and sales planning, and John Gunder, senior vice president of media and on-air sales. The board appointed Keith R. Stewart as president and COO.
Blue Nile’s International Sales SoarBlue Nile Inc. released its second-quarter earnings for the period ended June 29, 2008, reporting that international sales rose 179 percent to $8.1 million. Total worldwide sales increased 2.2 percent to $73.7 million, while net income fell 15.8 percent to $3.2 million. Gross profit for the second quarter expanded to $15.1 million, or 20.5 percent of net sales, compared with $14.9 million, or 20.7 percent of net sales, one year ago. Blue Nile expects between zero and 5 percent growth in the third quarter.
Article from the Rapaport Magazine - September 2008. To subscribe click here.