Diamonds are still a girl’s best friend. Most jewelers reported that their diamond sales were consistent and strong in the first quarter of 2007. Bridal demand is largely driving diamond sales, according to most merchants.

 

Here are the top three sales categories for jewelry in the first quarter:

• Diamond jewelry
• Colored gemstone jewelry (including jewelry with diamonds and other gems)
• Watches

In addition, jewelers reported that anything “unique” sold well. This includes the following categories:

• Designer jewelry
• Collections
• Jewelry utilizing several different precious metals
• Large, unusual, colored diamonds

GUILD JEWELERS

Guild jewelers offer a greater selection of unique and proprietary jewelry than most other jewelry merchants. Thus, their product mix helped them post strong sales. Among the guild jewelers, the following categories sold well.

 

Tiffany & Co. – Some of the products which fueled Tiffany’s strong 15 percent total sales gain – and its 12 percent same-store sales gain in its U.S. stores – include the following:

• Diamonds – A “stand-out” category, according to management.
• Silver jewelry
• Designer jewelry
• Collections
• Silver and gold charms

Harry Winston – Harry Winston did not disclose specific items which sold well in the first quarter.

 

• A portion of its first quarter sales was generated by merchandise which was in inventory when the company was acquired by Aber in 2004. This inventory was sold at below-average gross margins in the quarter. Management did not quantify revenues from this inventory liquidation.
• We believe that Harry Winston’s sales of larger, more expensive jewelry rose in the quarter.

Birks & Mayors – The company was not specific about which products sold well in the quarter ended March, but management did give some color to overall sales trends.

 

• Demand for high-end products was robust, in both Canada and Florida.
• Demand for middle-market products was also solid, but not quite as strong as for high-end merchandise.
• Demand for popular-priced goods slackened in the quarter. Management cited higher gasoline prices, falling home prices in the Florida market, and higher real estate taxes (in Florida) as taking a toll on consumer spending among lower-end mass market customers.

Movado Boutiques – Management did not specify which products were strong in its retail division. However, it did provide sales details by watch category.

 

• On a global basis, the company’s luxury brands, Ebel and Concord, reported flat sales. This was mostly due to the repositioning of the Concord brand. If one-time liquidation sales are excluded from sales of the luxury brands, revenues were down 7.7 percent in this category.
• On a global basis, the company’s accessible luxury brands, ESQ and Movado, experienced a 9.2 percent decline in sales primarily due to a shift in the retail calendar.
• Sales by the company’s U.S. wholesale segment were down 10.5 percent due to a shift in the retail calendar. Sales of luxury brands (Ebel and Concord) in the U.S. were about flat, but if one-time liquidation sales are excluded, sales were down by 12 percent. Sales of accessible luxury brands (ESQ and Movado) in the U.S. were down sharply, but the company did not provide enough information to calculate the sales decline.
• On a global basis, sales in the licensed brand category (Coach, Hugo Boss, Juicy Couture, LaCoste and Tommy Hilfiger) were up over 38 percent. In the U.S., sales of licensed brands were about flat.
• Wholesale sales in international markets rose by 21 percent. Demand from customers in Middle East markets helped boost international sales.

MASS MARKET FASHION JEWELERS

Most mass market fashion jewelers mentioned strong diamond sales. Finlay continues to generate strong sales from more fashionable jewelry, utilizing colored gemstones and other fashionable materials, because of its locations in department stores which are known as fashion-forward retailers.

 

Finlay Enterprises – Fashion demand drives sales at Finlay, since it operates licensed departments in major U.S. department stores. Finlay’s average ticket in its leased departments is $248 (2006), or about $50-100 below the average ticket of a mass market specialty jeweler. At the current level, retail prices are low enough for a significant level of impulse purchases by department store customers. The following jewelry categories showed strength in the first quarter:

 

• Silver with semi-precious stones and diamonds.
• Sport watches and watches with diamond dials.
• Men’s jewelry, especially with alternative metals such as titanium.
• Rings with large semi-precious stones.
• Certified diamonds, particularly mounted in earrings.
• Designer goods in the specialty stores and Bloomingdale’s.

Sterling Jewelers – Sterling did not report specific products that were strong. However, management noted the following:

 

• Demand for better quality diamond jewelry was especially strong.

Zale Corporation – Zale Corporation’s retail stores (88 percent of sales, including all brands) posted a sales decline of 2.5 percent while its kiosk division (11 percent of sales) posted a sharp reduction of 6 percent in sales. The “other” division (1 percent of sales) – mostly insurance and non-jewelry revenues – posted a sales increase of 5.6 percent in the quarter.

 

• Zale corporate management cited higher gold prices which hurt sales of gold jewelry sales.
• Piercing Pagoda customers are particularly sensitive to gold prices.
• Diamond fashion and diamond accent jewelry were very strong. Large stone sales are up double digit levels.
• Watch sales were strong.
• The company’s lifetime Jewelry Protection Program is doing well. It has an attachment rate of 54 percent versus the prior program’s 43 percent attachment rate. Historically, the company offered a two-year protection program; it has now eliminated that program in favor of the “lifetime” protection program.

ONLINE JEWELERS

The stock in trade of online jewelers is diamond jewelry, and that was the hot category in the first quarter.

 

Blue Nile – Blue Nile’s sales were driven by several product categories, including the following:

 

• Jewelry sales with an average ticket of $25,000 and higher were up 84 percent. Orders in this category were up 69 percent.
• There were seven diamond transactions above $100,000 in the quarter.
• The company sold a 5-carat $140,000 diamond engagement ring in the quarter.
• Blue Nile sold a pair of 6.5-carat diamond earrings for $130,000 in the first period of the year.
• While all product categories were strong, demand was especially robust for high value diamonds.
• “Customized” jewelry demand was very strong.
• Wedding band sales were the second largest category in the quarter.
• Sterling silver jewelry demand was strong.
• Pearls and colored gemstone demand was above average.

 

Abazias – Abazias does not disclose much about its sales trends by category. However, during the first quarter, it put out a press release about a large diamond sale, as follows:

 

• In February, Abazias sold a 5 carat, G / VSI diamond for $160,000.
• Abazias also noted that it is receiving increased requests from customers interested in buying diamonds of 3 carats and larger.

Bidz.com – The company sells gold, platinum and silver jewelry set with diamonds, rubies, emeralds, sapphires and other precious and semi-precious stones. It also sells watches. Products are sold through a continuous live format, featuring “no reserve” auctions, and a $1 minimum opening bid.