For Jewelers, Not a Happy Holiday

Although holiday 2000 had some bright spots-mainly at upscale, independent jewelers-most jewelers told JCK the season’s sales were disappointing. Many have merchandise left and don’t plan to do much buying in the first half of 2001. But, while holiday sales were down, most jewelers say sales weren’t dismal, and they remain optimistic about 2001.

According to the International Council of Shopping Centers, which tracked sales in a variety of product categories between Nov. 24 and Dec. 24, jewelry sales were down 3.6% from last year’s figures. (Apparel sales were up 3%, and furniture and home furnishings were up 1.9%, but music, video, and home entertainment sales dropped 6.3%.)

“The traffic is there, but people are spending less per item than the previous two years,” says Michael Jurado, owner of Hoover’s Jewelry in North Pratt, Neb. “Of course, the last two Decembers were record Decembers for us. It is noticeably down now, but not significantly down.” Deb McShane of Wimmer’s Diamonds in Fargo, N.D., says, “Sales were off about 15% from last year, and what we were missing were the big-ticket items.” Most of her sales ranged from $400 to $1,000, and like many other stores, those sales came late-the store’s busiest day was the Friday before Christmas.

Almost all jewelers interviewed by JCK say sales were both late and lower-ticket than last year. High-end independent jewelers reported some big-ticket sales, such as a 12-ct. diamond, a 50-ct. diamond “Riviere” necklace, and several 5+-ct. stones at Michael Genovese Jeweler in St. Louis, Mo., and three-stone diamond rings in platinum settings, high-quality diamond bracelets in 18k gold, Mikimoto pearls, and Rolex watches at R. Bruce Carson Jewelers in Hagerstown, Md. But overall, shoppers headed for goods priced around or under $500.

Most jewelers cited waning consumer confidence as the primary reason for the drop in sales, along with concerns about the stock market, bad winter weather, and the election debacle. “When consumer confidence drops, it does so with a vengeance,” says Ken Gassman, a retail analyst at Virginia-based Davenport & Co. He cites Zale Corp., which, after predicting an increase over last year’s sales, announced a 3%-4% drop in same-store sales.

Terry Burman, chairman and CEO of Akron, Ohio-based Sterling Inc., the second largest jewelry retailer in the United States, says, “The election aftermath had an effect in that it brought uncertainty, and that led to a further decline in the stock market. A period [following the election] that should have created optimism actually created more pessimism, and consumers are buying a little more toward necessity-sweaters and jackets [instead of jewelry].”

McShane says her best-selling products were diamond pendants and classic stud earrings (1-2 cts.), jewelry by designer John Atencio, and white gold pieces across the board. She saw a noticeable lack of engagement ring sales, although platinum supplier Johnson Matthey reported the metal was one segment of the market that posted strong holiday sales, mainly because of its popularity for bridal jewelry.

McShane remains positive about the coming year. “The last two years were phenomenal, and there will always be slow years like this. We’re looking forward to Valentines Day.” But with merchandise left, she won’t be buying for spring and probably will curtail buying overall.

Dale Perelman, president of Kings Jewelers, the 45-store chain based in New Castle, Pa., says that as of Dec. 22 the firm had 15 stores doing well for the holiday, 15 doing “so-so,” and 15 not doing well-of which three were doing “terrible.”

“We’re probably off by 5% or 6% from last year-but last year was the best year we ever had,” Perelman says. “It was a special year. There was Y2K, a booming economy, everything was going for us. This year, you have a lot of insecurity because of the presidential election, a soft stock market, the Fed increasing rates six times during the year. We’ve also had adverse weather [in western Pennsylvania].”

At Kings, the three-stone wedding band was a best seller. Perelman credits De Beers’ promotion of the item. Platinum is still doing well, he says, but tanzanite, which the firm expected to “go through the roof,” only did “okay.” The firm’s most active price category was under $500, lower than last year. “We are not seeing the huge sales we did at this time last year,” Perelman told JCK in December. “I’d say this year is a bit of a disappointment, but not a disaster. We’ll get through it fine.”

Dana Schorr of Schorr Marketing, Santa Barbara, Calif., a wholesaler of loose colored gems, says most of his clients told him that 2000 wouldn’t be as good as 1999, although for him, tanzanites sold well. “I don’t think I talked to a single dealer who didn’t say it was slower this year than last.” He and others blame much of the drop on the downturn in the stock market. “Those people who invested heavily in dot-com and high-tech areas may have lost money they would have spent on luxury items like jewelry. Even though their losses may still yet only be on paper, the potential for real damage to their investment portfolios prevented many from anteing up for holiday jewels.”

Other diamond wholesalers had mixed reactions to Christmas 2000, but nearly everyone agreed it was no match for Christmas 1999. Last year, diamond sales were up 12%, thanks to millennium hype, the strong economy, and a De Beers year-end advertising blitz. De Beers tried a similar last-minute campaign this year, but even going into the season, executives expected only a 5% to 7% increase.

But dealers aren’t sure sales hit that mark. The Israeli newspaper Ha’aretz estimated that worldwide diamond sales were down some 10% from 1999, with dealers particularly disappointed about sales in America. (Note: According to the Wall Street Journal International, holiday jewelry sales in Europe were okay in general, but soft in the United Kingdom.) “To a certain extent, we were spoiled,” says dealer Zvi Gutentag of Galaxy Diamond. “Everyone expected last year’s bonanza to continue indefinitely.”

William Blair & Co. principal and research analyst David Ricci said in a Reuters business report posted on Yahoo.com, “The first half will be sluggish. I wouldn’t be surprised if we see negative same-store comparisons for mass-marketers.”

Jewelers who posted holiday sales gains tended to come from the higher end of the market. Joseph Romano, president of Scull & Co., says some of his guild store clients reported gains of up to 22% over last year’s figures. Overall, he expects his clients’ sales to be up 3% to 5%.

Jeweler Tom Newcomer of R. Bruce Carson Jewelers, in Hagerstown, Md., says his store had its best season ever, with an increase of about 16%. St. Louis jeweler Michael Genovese says, “We are having a nice increase again this year. I hear that other people aren’t doing well, or that consumers are uncertain, but I’m not hearing or seeing that in sales.”

Luxury Internet sites such as Ashford.com, Blue Nile, and Enjewel all reported a positive holiday season. Sheldon Ginsberg, CEO of Enjewel says the Christmas season met the young company’s expectations. “We launched in October with a minimal amount of advertising,” he says. “It’s a soft launch. We think the site is working well.” One hot seller this season for Enjewel was the “Election Collection,” by Kurilla Design. The jewelry line satirized the presidential election controversy in Florida. Among the items were “Pregnant Chad” cufflinks, sterling silver “Butterfly Ballot with Hanging Chad” necklaces, and sterling silver “Dimpled Chad” earrings. Ginsberg says the success of the line increased overall traffic on the site. “The orders coming in for this were staggering,” he says. “It drives traffic and has an awesome ripple effect. They ended up buying lots of other items.”

Even jewelers who had smaller-than-expected increases-or even decreases-were realistic about the numbers coming off 1999’s stellar sales. For example, Jed Davis, owner of Nicolson & Ryan in Augusta, Maine, says, “We were down 3% from last year, which had blown every other season out of the water. So we are happy.” Olivia Cornell, of Cornell’s Jewelers in Rochester, N.Y., says, “We were strong going in-ahead about 20% over last year-but for the holiday, we saw only about a 10% increase.” She says they were disappointed, having bought for a bigger increase, but she is happy that sales increased at all.