Retail Bulletin

RAPAPORT... U.S. Retail Sales Drop in August
Retail sales in the U. S. fell 0.3 percent from July to August to $381.2 billion, according to data from the Commerce Department. The governmental agency does not adjust for price increases, but said that compared with August 2007, retail sales rose 1.6 percent. Compared to one year ago, department store sales fell 4.2 percent in August to $16.84 billion, according to Commerce Department data.

Some relief may be on the horizon for shoppers, however, as the government claimed that wholesale price inflation fell almost 1 percent in August due primarily to a drop in oil prices. For the year, though, wholesale prices are up 10 percent, the largest increase in 27 years. Core inflation, which excludes energy and food price hikes, rose 0.2 percent from July to August.

Harry Winston’s Retail Sales Jump

Harry Winston’s retail segment recorded a 19 percent increase in sales to $81.1 million in its second fiscal quarter of 2009. The company’s cost of sales rose 15 percent to $41.2 million. Sales across Europe rose 49 percent to $31.6 million from $21.2 million in 2007. Sales increased 31 percent in the U. S. to $29 million, compared with $22.2 million in the comparable period of 2008, and sales across Asian markets fell 17 percent to $20.5 million.

U.S. Jewelry Retail Sluggish

Retail sales in the U. S. remained sluggish during August, as the jewelry segment continued to show a mixed performance at different large retailers. According to the International Council of Shopping Centers (ICSC), chain-store sales rose nearly 2 percent in August, down from July’s 2.5 percent increase. ICSC’s chief economist Michael Niemira said sales were boosted by “rampant” promotional activity, which helped drive some customer traffic.

Big box retailers, however, reported mostly negative results, with some citing jewelry as a very poor performer. Kohl’s Corporation reported a sales increase of 2.6 percent to $1.3 billion in August, although same-store sales fell 5.8 percent. Costco Wholesale Corporation’s sales rose 12 percent to $5.4 billion and its same-store sales rose by 9 percent.

Neiman Marcus’ revenues rose 0.7 percent in August to $285 million, while its comparable revenues fell 0.5 percent. Jewelry and women’s fine apparel were the strongest categories. Saks Incorporated’s sales fell 6.1 percent to $200.5 million and its comparable store sales decreased 5.9 percent for the period, compared with an 18.2 percent increase last August.

Signet’s U.S. Sales Fall

Signet Group plc reported that same-store sales fell 5.2 percent in the U. S., with U.S. sales accounting for 75 percent of total sales. In the U. K., Signet’s sales rose 2.3 percent for its first fiscal half ended August 2, 2008. Group sales fell 0.6 percent to $1.6 billion. The jewelry retailer stated that results from price increases remained encouraging and the group expected to maintain its gross merchandise margin rate at 7.9 percent. The average unit selling price in both the mall and Jared formats rose by about 7 percent.

The jeweler’s common shares were added to the Russell U.S. Index family, which is used to benchmark $4.4 trillion of investment assets. Signet is now a member of the broad-market Russell 3000 Index, Russell 3000 Value Index, Large Cap Russell 1000 Index, Russell 1000 Value Index, Russell 2500 Index, Russell 2500 Value Index, Russell Midcap Index, Russell Midcap Value Index, Russell Small Cap Completeness Index and the Russell Small Cap Completeness Value Index.

Richemont’s Overseas Sales Strong

Richemont reported weaker sales in July and August, compared with the first few months of 2008, but business remained strong, particularly for its jewelry maisons. Sales across Europe and Asia were strong in the five months leading up to the company’s annual meeting, but sales in the U. S. remained flat through August.

The Swiss-based luxury retailer reported at its annual general meeting that sales grew 11 percent in the first five months of its fiscal year ended August 30, 2008. Group sales rose 13 percent to $2.3 billion (EUR 1.4 billion) in the first quarter of the year. For the five months leading up to the meeting, Richemont’s jewelry maisons — Cartier and Van Cleef & Arpels — experienced sales increases of 13 percent, with strong performances among “high jewelry” pieces. First-quarter jewelry sales grew 16 percent to $1.2 billion (EUR 737 million).

J. C. Penney’s Same-Store Sales Down

J. C. Penney reported that same-store sales fell 4.9 percent in August, calling fine jewelery and home decor its softest categories. Total sales fell 3.2 percent to $1.5 billion. The company expects a same-store sales decrease in the mid- to high-single digit range for the five weeks ended October 4, 2008. Last year, same-store sales dropped 3.7 percent. For the fiscal year to date, J. C. Penney’s same-store sales have fallen 5.7 percent and total sales have fallen 4 percent to $9.9 billion.

Lazare Kaplan’s Profits Soar

Lazare Kaplan International Inc.’s fourth-quarter sales fell 2.6 percent to $94.4 million for the period ended May 31, 2008. The company’s gross margin rose from 5.6 percent to 10.4 percent during the quarter. Its full-fiscal-year sales fell 14.9 percent to $369.7 million, while its gross margin for the year rose from 5.3 percent to 8.9 percent. Net income for the fiscal year was $7.2 million.

Hong Kong’s Jewelry Sales Rise

Hong Kong’s retail sales for July increased 13.8 percent from one year ago, but jewelry sales remained flat, Hong Kong’s Census and Statistics Department (CS&D) reported. CS&D said total retail sales grew to approximately $24.2 billion. When accounting for the effect of inflation, sales by volume grew a more humble 6.6 percent for the month. Jewelry was among the weaker performers by volume, as were watches and clocks, and
valuable gifts fell by less than one percent.

For the first seven months of the year, Hong Kong’s total retail sales increased by 15.6 percent in value and 8.9 percent in volume compared with one year ago.

CS&D’s sales statistics are meant to gauge short-term, local retail sales and do not reflect wholesale sales or consumer spending on services. As such, these numbers account for visitor purchases, but not goods purchased outside the territory by Hong Kong residents.

Article from the Rapaport Magazine - October 2008. To subscribe click here.