(IDEX Online News) – Jewelry sales in the U.S. market rose by a dramatic 12 percent during June 2011, when compared to the same month a year ago. This was the third consecutive month of double-digit gains for American jewelry retailers.

 

The full analysis is available to IDEX Online Research subscribers and IDEX Online members here.

 

However, reality is about to snatch the punch bowl from the party, just as the celebration of strong jewelry sales gains reaches an apex. Jewelers tell us that their sales began to wane in late June, followed by a relatively weak July. Early August sales have been characterized as “very soft” by many jewelers. Thus, we would expect that jewelry sales in July and perhaps August will reflect much more modest gains.

 

Highlights from June 2011 jewelry sales reports are as follows:

 

·        Total U.S. jewelry and watch sales rose by just over 12 percent, when compared to the same month a year ago.

 

·        Specialty jewelers took market share from other merchants – primarily discounters and multi-line merchants – who sell jewelry.

 

·        Watch sales gains slightly outpaced jewelry sales gains.

 

The table below summarizes jewelry and watch sales data for the month of June 2011 in the U.S. market.

 

Source: US Dept of Commerce

 

Demand for luxury goods – especially higher-end merchandise – has been solid for the past few months, and jewelry is benefitting from this trend. Unfortunately, sales are mixed at mass-market jewelers who sell jewelry at popular price points, according to our sample.

 

Further, sales of branded jewelry, as compiled by the LGI Network, an NPD Group company, showed a gain, though it was more modest than total jewelry sales. This indicates that consumers continue to seek a fashion look at a value price; brands are less important than “the look.” 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. It is important to note that this graph reflects a major revision in monthly sales by the Commerce Department. However, while the percentage gains may have changed somewhat, broad sales trends remain mostly unchanged.

 

Source: US Dept of Commerce

 

Outlook Remains Relatively Positive

Consumers are spooked: the politicians in Washington have proven themselves to be dysfunctional; S&P had downgraded U.S. debt; global financial markets are in turmoil; the Arab Spring might be spreading to Europe; and, the U.S. economy seems stuck in a rut. As a result, they appear to have cut back on spending, though July preliminary retail sales gains were above some forecasters’ expectations (the preliminary sales report does not include jewelry, which, as noted earlier, seems to have softened).

 

Based on six months of 2011 sales data, the U.S. jewelry and watch sales could grow to as much as $68 billion for the full year ending December 2011, a gain of about 11 percent over 2010 sales levels, based on newly revised data from the Department of Commerce. Earlier, the government had reported that jewelry sales were running at a rate of over $70 billion for the year, which we contended was too high.

 

We continue to remain 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 $65-66 billion range for the year, rather than the government’s forecast of about $68 billion, an 11 percent gain. Further, over the next couple of years, we believe that jewelry sales gains will settle in at about 4 percent or so annually.

 

Two months ago, we said that we were looking for significant revisions in the data that will be reported in early July. Unfortunately, the new revised data was delayed, and it has just been reported in mid-August. As expected, the preliminary robust sales trends which had been reported earlier this year were toned down just a bit. Despite these revisions, 2011 will likely be another record sales year for the U.S. jewelry industry.

 

IDEX Online Research has prepared a separate article on the Commerce Department’s revised sales data for the American jewelry industry. 

 

The full June sales analysis and statistics is available to IDEX Online Research subscribers and IDEX Online members here. Click here for more information on how to subscribe or become a member.