Jewelers of America said that overall sales growth was to 3.9 percent in 2005, a drop from the 6.1 percent of growth recorded in the prior year.

JA released sales growth figures and other data Wednesday as part of its “2006 Cost of Doing Business Survey.” The survey analyzed stores’ financial data, complied from a cross section of retail jewelers, including: 27.8 percent responded from independent high-end firms; 56.9 percent from independent mid-range firms; 6.1 percent from designer, artist, custom firms; and 6.4 percent from chain stores.

All store categories experienced some level of growth. Chain stores and independent high-end stores saw the highest growth at 4.9 percent and 4.4 percent respectively, while independent mid-range stores experienced 2.5 percent growth.

Store profitability inched upward to 4 percent in 2005 (compared to 3.9 percent in 2004 and 4.4 percent in 2003), according to the annual report. Gross margins were down slightly  at 48.4 percent in 2005, compared to 49.2 percent during 2004 – and are at their lowest point since 2000’s 47.4 percent.

Diamonds continue to represent the greatest share of sales, with diamond jewelry accounting for 33 percent and loose diamonds representing 15 percent of sales in 2005. Colored stone jewelry (10 percent) and karat gold (9 percent) provide the other two largest shares of retailers’ sales.

The survey also shows that customer service does pay off, as repairs bring in 10 percent of sales for retailers (up from 1 percent in 2004). Sales of timepieces increased slightly at 5 percent.

According to the survey, high-profit firms spend a lower percent of net sales on payroll (18.8 percent compared to the average 20.7 percent of all firms). In addition,, high-profit stores have found ways of containing their operating expenses, like paying less for occupancy (4.7 percent, compared to 5.6 percent for low profits). High-profit firms spend about 39.4 percent on total operating expenses, compared to 45.6 percent for low-profit companies.

High-profit firms also manage their product inventory more efficiently by choosing products that provide the greatest return, selling more per square foot, and turning over inventory more frequently, according to the survey. In turn, they experience far greater sales growth (7.1 percent) than the typical jewelry store (3.9 percent).

The survey was prepared by marketing research firm Advantage Marketing Information. To order the 75-page report, call Jewelers of America at 800-223-0673, or visit JA online at www.jewelers.org. The survey is available in electronic format or hardcopy to JA members for $19.95, and to non-members for $125. (Shipping and handling charges apply.) JA members who participated receive the survey for free.

JCK