(IDEX Online) – If you are among those that questioned loose diamond sales, here is part of the answer. There’s nothing but good news for jewelry sales in the U.S. market: jewelry and watch demand is strong!

 

In May 2011, jewelry and watch sales rose by double-digit levels: +15%, for both specialty jewelers and for all other merchants who sell jewelry. This was the largest monthly gain in several years.

 

Watch sales gains have outpaced jewelry sales gains for the first five months of 2011, after languishing in 2010 and earlier.

 

The best news: jewelry and watch sales gains are much stronger than sales gains of other retail categories.

 

The table below shows the highlights of jewelry and watch sales for the month of May 2011 for the U.S. market:

 

Source: US Dept of Commerce

 

Demand for luxury goods – especially higher-end merchandise – appears to be strong across the board, and jewelry is benefitting from this trend. Unfortunately, sales are more mixed at mass-market jewelers, according to our sample.

 

Further, sales of branded jewelry, as compiled by the LGI Network, an NPD Group company, were weak, indicating that consumers continue to seek a fashion look at a value price without regard for the brand. Branded goods typically sell at a premium price since consumers are buying “the brand” as well as the merchandise.

 

The graph below shows total jewelry and watch sales trends for the past fifteen months.

 

Source: US Dept of Commerce

 

Outlook Remains Positive

Despite near term challenges – continuing cleanup from the earthquake and tsunami in Japan, political unrest in Arab countries, a lackluster economic recovery with high unemployment in the U.S., and continued infighting among politicians about America’s high debt levels – most American consumers have returned to the malls, and they are buying retail goods.

 

Based on five months of 2011 sales data, the U.S. jewelry and watch sales could grow to as much as $72 billion for the full year ending December 2011, a gain of about 14% over 2010 sales levels. This annual “run rate” is based on the latest data from the Department of Commerce.

 

We’re skeptical of the Commerce Department’s numbers: a gain in the mid-to-high single digit range seems much more reasonable to us. This would yield jewelry sales in the $66-68 billion range for the year, rather than the government’s forecast of about $72 billion, a 14% gain. Further, over the next couple of years, we believe that jewelry sales gains will settle in at about 4% or so annually.

 

Last month, we said that we look for significant revisions in the data that will be reported in early July. That did not happen, but we’re still thinking that major data revisions will occur later this year. Thus, all of these robust trends may shrink somewhat, with the release of new data.  

 

Jewelry Sales Detailed Data

The following graphs summarize detailed data for jewelry and watch sales in the U.S. market.

 

Total jewelry and watch sales through all retail outlets rose by 14.9% in May. This is the largest monthly sales gain in several years. Total jewelry (only) sales rose by 14.2% in May, as the graph below illustrates. Watch sales soared by 20.5%, as reported by the Department of Commerce.

 

On a year-to-date basis, total jewelry and watch sales are up by 11.3%, while jewelry sales are up 10.1% and watch sales are up 13.1% year-to-date.

 

Source: US Dept of Commerce

 

Watch sales among jewelers in the LGI Network were up 21% on a same-store sales basis. This was in line with watch sales as reported by the Department of Commerce, as the graph below illustrates.

 

Source: US Dept of Commerce

 

Specialty jewelers’ May sales rose by a robust 14.8%, while jewelry and watch sales at “other” retailers – largely discounters – were up 15.0%. Historically, “other” merchants have been taking market share from specialty jewelers. Last month, this trend reversed, and this month specialty jewelers’ sales gains and jewelry sales trends at “other” merchants are running neck-and-neck. The graph below summarizes sales gains at both specialty jewelers and “other” merchants who sell jewelry.

 

 

Source: US Dept of Commerce

 

Specialty jewelers posted a solid 14.8% sales gain in May, as the graph below illustrates. For the first five months year-to-date, specialty jewelers’ sales gains rose by 11.8%, according to data from the government’s Department of Commerce.

 

Source: US Dept of Commerce

 

Jewelry and watch sales gains continue to outpace sales gains for other retail categories. For the month of May, total U.S. retail sales were up 7.9% while retail sales, ex-automobiles, rose by a more robust 8.7%. This is just over half of the sales gain that the jewelry and watch industry posted, as the graph below illustrates.

 

Source: US Dept of Commerce

 

Year-to-date total retail sales are up 7.9% through May, right in line with May’s monthly total retail sales gain of 7.9%. Year-to-date retail sales, ex-automobiles, are up 7.3%, somewhat below May’s 8.7% retail sales gain (ex-auto).