As the summer vacation period comes to an end and thoughts start to wander to the critical holiday sales season, what is the state of the American diamond and jewelry market?
U.S. Market Shows Strength Ahead of Holiday Season
The general consensus, certainly according to comments heard at the JCK Show Las Vegas which ended in early June, was that the US market is stable. And at a time when the Chinese market is declining, the stability of the American market is proving to be a crucial advantage for the global diamond business.
According to reports based on interim government figures, overall U.S. jewelry and watch sales amounted to $5.2 billion. Jewelry sales posted a similar performance, with sales of $4.6 billion.
For the first six months of the year, jewelry sales came in at nearly $29 billion.
The US economy is continuing to show signs of a turnaround. Unemployment and gasoline prices are declining, while stock markets and house prices are rising, and retail sales are becoming stronger.
An unsettled global economy
There is no doubt that the U.S. economy is gaining strength: unemployment is down to 5.3 percent from 10 percent in 2009. Gross domestic product expanded at an annualized rate of 3.7 percent in the third quarter, and the federal deficit is estimated at $486 billion this year, or about a third of what it was in 2009.
Indeed, the United States is one of the bright spots in an unsettled global economy. Much of Europe remains in a rut, with little if any growth. The so-called BRIC countries, Brazil, Russia, India and China, which were seen just a few years ago as being the nations that would push the global economy forward, are today among the most problematic.
Brazil is facing severe political problems due to alleged corruption at the highest levels and Russia is having to deal with sanctions due to its involvement in Ukraine and plunging oil prices which have hammered revenues. Meanwhile, in India, the picture is mixed, and China is increasingly shaky with its currency being devalued by the authorities to make its exports more attractive and the Shanghai stock exchange crash of June-July seeing trillions of dollars of wealth being destroyed.
In an indicator of the state of diamond and jewelry sales in the United States and globally, Signet Jewelers, which has more than 3,000 stores across the United States and Canada, as well as in Britain, reported that sales grew 15 percent to $1.4 billion during the three months ending August 1, driven by its acquisition of Zale Corporation which took place at the start of last year. Same-store sales, a vital indicator of the health of store sales, jumped4.2 percent while net income rose 7 percent. American consumers paid more for jewelry, Signet said, with the average price at its U.S. Sterling division up 4.2 percent.
Store sales jumped strongly
Meanwhile, Tiffany & Co. reported that second quarter sales totaled $991 million while profit was $105 million. Same-store sales jumped strongly, up 7 percent, and beating analyst estimates of 3.5 percent.
And at online retailer Blue Nile, the firm posted an increase in net sales of 6.7 percent to $113.7 million for its fiscal second quarter which ended on July 5. The retailer’s profit was $2.3 million, more than the $2.2 million it recorded in the second quarter of 2014. Blue Nile reported that U.S. engagement net sales for the second quarter 2015 increased by 7.5 percent to $65.5 million, while U.S. non-engagement net sales for the quarter showed an increase of 3.5 percent to $28.7 million.
“We made good progress on our key initiatives which delivered revenue growth and expanded profitability,” commented Harvey Kanter, Blue Nile Chairman, CEO and President. Overall, the United States remains the leader of the global economy. Its retail sector is continuously picking up, jobless numbers are declining, and consumer confidence is rising.
For now, all eyes will be focused on the September edition of the Hong Kong Gem & Jewellery Fair to see which way the winds are blowing in the global diamond jewelry trade.