JA: Jewelers’ Sales Up, But Profit Elusive

Jewelers of America’s annual “Cost of Doing Business” survey found that jewelers enjoyed a 6.9 percent gain in sales in 2010—but the survey says that many are still struggling to be profitable.

The sales increase marked the first one the survey had recorded since 2006, and stands in stark contrast to 2009’s 4.5 percent decrease.

Yet, according to the survey, profitability did not grow commensurate with sales, with 22 percent of retailers reporting a negative net profit to net sales, while only 28.7 percent said they were profitable—with many reporting a net profit of 4 percent or less.

Overall gross margins remain relatively consistent with 2009 data: 49.1 percent in 2010, compared to 49.4 percent in 2009.

“JA is positively delighted to see a uniform strong increase in sales,” JA chief operating officer Robert Headley tells JCK. “Our retailers are breathing a sigh of relief. It is a simply a fact of life that some firms are still not profitable. But the climate has improved.”

Other findings:

  • A majority of jewelers (54 percent) only use the Internet for promotional purposes, with 36 percent of respondents using it for “promo and sales.” Some 10 percent aren’t currently using it at all.
  • Diamonds and diamond jewelry continue to represent the largest category of sales, the survey found.
  • Sales increases were recorded among all types of jewelers, with mid-range stores showing the biggest jump (7.4 percent), and chains showing the smallest (3.7 percent).