US Watch and Jewelry Sales Keep Rising in April

(IDEX Online) - Our new, expanded coverage of US watch and jewelry sales presents a more in-depth picture, with data and analysis relating to the specialty jewelry sector, which is no longer included in Department of Commerce updates, as well as overall jewelry sales.

Watch and jewelry sales in the US slipped slightly during April, according to estimates by the US Department of Commerce.

They were 4.7 per cent up, year-on-year, in the sixth consecutive month of growth after sales fell every month from February to October last year.

Sales for March have been revised down from a 6.8 per cent year-on-year increase to 5.7 per cent by the department's Bureau of Economic Analysis (BEA), based on actual rather than estimated transactions. Sales for January and February have likewise been lowered.

The BEA figures shown below represent sales by Amazon, Costco, Walmart and other multi-line retailers, accounting for around two thirds of all watch and jewelry sales in the US. But they exclude the specialty jewelers - merchants who sell only fine jewelry - representing the remaining third.

Jewelry sales rose by 5.2 per cent during April, according to Department of Commerce figures for multi-line retailers and watch sales were up by 4.6 per cent during April, an average increase of 4.7 per cent.

Signet Reflects Fortunes of U.S. Specialty Jewelers

Given the lack of government data, IDEX Research has determined that sales results from Signet Group's U.S. stores, as reported by fiscal quarter (February, March, April and each succeeding three-month period) tend to reflect overall sales trends of U.S. specialty jewelers.  

Those figures indicate that Americans are buying more jewelry. Retail jewelry sales in the U.S. market have shown a solid growth over the past 12 months.

They also show that multi-line retailers have shown greater sales growth than specialty jewelers such as Kay and Zale. The slope of the line for "Total US Jewelry Sales" is rising more rapidly than the slope of the line for "Signet N. America Same-Store Sales", which we view as a proxy for other specialty jewelers.  

Specialty jewelers' market share continues to decline modestly when compared to multi-line merchants. We estimate that specialty jewelers' market share to be around 30 to 33 per cent, down from a peak of 73 per cent market share in 1971.  

While revenues from Signet's U.S. brands such as Kay and Zale may show some quarterly variation due to merchandise and marketing programs, we believe they broadly reflect overall specialty jewelers' sales trends in the U.S.  

Based on our rough estimates, Signet's revenues at its U.S. brands reflect between six and seven percent of total U.S. jewelry sales, and very roughly around fifteen percent or so of estimated specialty jewelers' sales.  Hence, its revenues reasonably represent a proxy for all specialty jewelers' sales.

For comparison purposes, we use Signet's "same-store sales", a major benchmark used to judge relative performance of retail merchants. Signet defines same-store sales as a comparison of sales in stores that were open in both the current fiscal period and the same period of the prior fiscal year.  Sales from newly opened stores, closed stores, acquired stores, and certain other non-comparable revenue have been excluded.  For a full explanation of Signet's same-store calculations, see the company's financial filings.

As the graph above illustrates, both U.S. jewelry sales and Signet's revenues have been showing growth over the past year.  We believe this reflects directionally jewelry sales results for both overall jewelry demand and revenues at specialty jewelers.

U.S. Jewelry Sales Trend 2022-2024

We now expect U.S. jewelry sales in 2024 to grow at around three to five per cent annually, a rate in line with historic growth rates for fine jewelry sales. We expect to see the traditional seasonal peaks and valleys, mostly related to specific jewelry buying holidays such as Christmas and Mother's Day.

For the first three months of 2024, jewelry sales have shown an average annual sales gain of just over four per cent, in line with historic growth trends. Hence, we believe that U.S. jewelry demand trends are likely to trend at something closer to historic growth rates for the balance of the year. We'd expect to see jewelry sales gains in the three-to-five per cent for the full year 2024, though jewelry merchants can expect the roller coaster ride to continue, with some strong months and some softer months.

In contrast to jewelry demand, overall consumer demand for retail goods has been slowing during the first few months of 2024 in the American market. Merchants likeTarget and others have reported disappointing revenues, blaming inflationary pressure. In contrast, prices of fine jewelry have been mostly steady, with some prices falling.

Further, lab-grown diamonds, a new category gaining rapid popularity, offer a high perceived value, when compared to traditional natural diamonds. Thus, shoppers can buy more bling for less money.

While there has been a slowdown in consumer spending in the U.S. market in the early months of 2024, most retail forecasters are predicting a pick-up in consumer demand later this year, as inflation eases, largely due to the Fed's anti-inflationary programs.

IDEX Research continues to hear disparaging remarks about jewelry demand - especially long-term demand - from uninformed economists. Those economic forecasters are wrong. Shoppers' demand for bling has existed for hundreds of years, and that isn't about to change.