Jewelers of America Releases 2009 Cost of Doing Business Report

Jewelers of America has released its 2009 Cost of Doing Business Report, which analyzes retailers’ financial data from 2008. According to the report, retail jewelry sales declined last year by 3.5 percent.

One of the report’s key findings underscores the importance of effective management during economically challenging times. High-profit firms experienced overall sales growth of 3.1 percent, versus their low-profit counterparts, who had an average sales decline of 12.6 percent.

High-profit stores not only had greater sales per store in 2008 ($1,290,372 on average compared to $1,176,100 for low-profit stores), but they had higher sales per full-time employee and sales per square foot, with lower payroll and operating expenses. Additionally, high-profit stores continued to experience a 20 percent greater inventory turnover than low-profit firms.

The Report, which has been published annually for 18 years, compiles data from a cross section of jewelers, including independent high-end firms (30.7%), independent mid-range firms (44.2%), jewelry chains (8.4%) and designer/custom jewelers (22.2%).

Sales at independent high-end retailers were down 1.3 percent, compared to growth of 3.5 percent in 2007. Mid-range retailers were down 5.5 percent (versus -1.7 percent in 2007), while chains saw the steepest declines, off by 13.2 percent (versus growth of 2.5 percent in 2007).

Profitability was down, with specialty jewelers experiencing a median 3.6 percent net profit as a percent of net sales compared to last year’s 4.6 percent. Gross margins declined across all store types; however, the median gross margin at 48.6 percent remained consistent with 2007 (48.7%).

In 2008, the diamond category (loose and set) remained the majority, with 49 percent of sales, down 3 percent from 2007. The next biggest product categories are colored stone jewelry (9% of sales) and karat gold (8%). Repair sales remain an important category, bringing in 10 percent of sales. Timepieces saw growth, up from 3 percent of sales in 2007 to 6 percent in 2008.