Financials

Brilliant Earth Lowers Guidance Amid Macro Headwinds

FinancialsNov 14, 2022

Brilliant Earth Lowers Guidance Amid Macro Headwinds

The jewelry company posted a strong third quarter but remains cautious about the rest of the year.

20221114_Brilliant Earth.jpg
The “Festivity” prasiolite and diamond ring in 18-karat yellow gold ($1,690) from Brilliant Earth’s new cocktail ring collection. It posted its fifth consecutive quarter of growth as a public company but is approaching the rest of the year with caution.
San Francisco—Brilliant Earth posted double-digit growth in the third quarter, marking its fifth consecutive quarter of growth as a public company, but has lowered its fiscal guidance in the face of macro headwinds. 

“Our ongoing strength reflects the growing awareness of Brilliant Earth as a key destination for highly-curated and exclusive jewelry in a joyful omnichannel shopping environment,” said CEO Beth Gerstein.

The company has been steadily growing its retail footprint, opening new stores in 10 cities in 2022.

Here are five important takeaways from its most recent results.

Brilliant Earth’s Q3 sales climbed double digits.

The company had a strong third quarter, with net sales totaling $111.4 million, a 17 percent increase year-over-year compared with $95.2 million in the previous third quarter.

Total orders were up 28 percent.

Net income was $5.7 million, up 43 percent compared with $4 million in the previous third quarter.

Gross profit was $60.9 million, or a 55 percent gross profit margin, compared to $48.0 million, or a 50 percent gross profit margin, in the prior-year period.

The margin expansion was driven by a strong brand presence, varied product offerings, and other factors, said the company.

“These results are the continuation of the multiyear strategy we’ve been executing to transform the jewelry industry. I know that is a bold and ambitious aim, but I start there because it is core to everything we do,” said Gerstein on an earnings call Friday evening.

For the first nine months, net sales were up 24 percent to $320.3 million, compared with $258.3 million in the prior-year period. Total orders were up 33 percent.

Net income totaled $12.8 million, down 14 percent compared with $14.8 million in the 2021 nine-month period.

Gross profit was $168.9 million, or a 53 percent gross profit margin, compared to $125.1 million, or a 48 percent gross profit margin, in the prior-year period.

Gerstein pointed to the company’s asset-light business model and its data-driven approach as reasons for its success.

In Brilliant Earth showrooms, customers can visit in person or make a virtual appointment to try on different pieces of jewelry, but will receive their purchase at a later date, as most styles are made to order.

Brilliant Earth is all in on fine jewelry.

The digital native company is best known for its bridal offerings but has been bolstering its fine jewelry offerings in recent quarters.

“Consistent with our plans, we continue to see outsized performance within our fine jewelry assortment with growth that far outpaces the business as a whole,” said Chief Financial Officer Jeff Kuo on the call.

However, since fine jewelry and wedding bands have a lower average price point than its overall business, there was a single-digit percentage decline in its blended average order value in the quarter.

“We have also seen outsized growth in fine jewelry at more accessible price points as our product breadth has expanded,” he added.

Overall, Gerstein said the company saw increased demand at the midrange of its offerings, which was offset by moderation in the $10,000-and-above price range.

“We’re not ready to call it a trend just yet, but it is something that we’re overall watching,” said Gerstein, noting this was first observed in October and this could vary for the holidays.

Brilliant Earth launched a cocktail ring collection last month ahead of the holiday season, channeling 1920s glamour into the new 21-piece line, featuring both natural and lab-grown gemstones.

The company also launched a men’s jewelry line this June and has introduced thousands of new natural and lab-grown colored diamonds, as well as a wider assortment of colors, shapes, and price points.

The company has also collaborated with popular designers for new collections, including Tacori and Jade Trau.

 Related stories will be right here … 

Brilliant Earth is continuing to grow its retail footprint.

Though it got its start in e-commerce, Brilliant Earth has been expanding its brick-and-mortar presence to meet customers wherever they are.

In 2022, the company opened new showrooms in 10 cities, including Houston, Minneapolis, Detroit, and St. Louis.

Brilliant Earth now has 25 showrooms, most recently opening locations in Palo Alto, California and Baltimore, Maryland.

The company plans to nearly double its showroom leases by the end of the year while it continues enhancing its digital experience as well.

“We are excited to see our retail footprint in both California and the Mid-Atlantic region continue to grow,” said Kathryn Money, senior vice president of merchandising and retail expansion, in a recent press release.

“The purchase of an engagement ring or piece of fine jewelry is a highly considered decision. Our showrooms are designed to help meet the needs of a new generation of customers, providing them an intimate, personalized, and joyful shopping experience.”

The company has retail locations in several key markets, including Atlanta, Boston, Chicago, Dallas, Los Angeles, and New York.

“Our showrooms drive growth in average order value and, equally important, deliver strong ROI, reinforcing our belief in the power of the showroom model,” said Gerstein during the call.

It has lowered its fiscal outlook as it approaches Q4 with caution.

The company has lowered its fiscal outlook for the months ahead.

Though the company has seen growth, it said macro headwinds and “the anticipated promotional environment” are more difficult than earlier in the year, giving it a more cautious view of fourth quarter revenue.

“While we are still seeing strong consumer interest, demonstrating the resonance of our brand, we are seeing a further lengthening of the decision-making process given the macroeconomic uncertainty as more customers take a wait-and-see approach,” said Gerstein on the call.

The company has been seeing strong interest and traffic in its online showrooms, she added.

“One of the overall differentiators that we have is we don’t believe that all revenue growth is equal, and we don’t believe in chasing unprofitable growth,” said Gerstein, noting Brilliant Earth will not be discounting the same way other retailers may be to sell through their inventory.

The company now expects to see annual net sales of $436 million to $446 million, down from its previous guidance of $450 million to $470 million.

Its fourth-quarter sales are expected to be in the range of $116 million to $126 million.

The adjusted EBITDA is within the prior outlook range.

“With the key weeks of holiday selling still ahead of us, we are well prepared to take advantage of the season and are confident in our ability to extend our leadership as the jeweler of the next generation consumer in the near and long-term,” said Gerstein.

The company also lowered its guidance in the first quarter, noting the impact of the geopolitical and economic environment as well as more moderate sales growth despite strong demand.

Brilliant Earth is courting Millennial and Gen Z customers.

Brilliant Earth is looking to appeal to the younger market, particularly Millennial and Gen Z customers.

As part of its brand awareness strategy, the company designs its content for social media to draw in these demographics.

“We note that our millennial and Gen Z shoppers continue to over-index on research from word-of-mouth and social media,” said Gerstein on the call.

It’s been utilizing partnerships with in-demand influencers to create content for the wedding season, like curating the best wedding day jewelry or hosting a Q&A session on styling.

The company noted last quarter that its TikTok efforts have been especially successful, with 13 percent of customers surveyed stating that’s where they learned about the brand.

“During the third quarter, we scaled significantly more content, including influencer, organic, and branded content, with 50 percent content growth quarter-over-quarter and saw a more than 200 percent increase in viewership,” Gerstein added.
Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

The Latest

Stock image of a gavel
CrimeJun 14, 2024
2 Men Sentenced to Life in 2022 Murder of Detroit-Area Jeweler

In court, Daniel Hutchinson’s loved ones remembered the jeweler as a giver, a role model, and a leader.

Billie Bangle
CollectionsJun 14, 2024
Piece of the Week: Jade Trau’s ‘Billie’ Bangle

Take a walk along this bangle’s diamond “cobblestone” made from round-, pear-, and marquise-cut diamonds.

Graphic with headshots for My Next Question 2024 Las Vegas webinar
Recorded WebinarsJun 14, 2024
Watch: What Happened in Vegas in 2024

The National Jeweler editors discuss the hot topics, best jewels, and current trends that stood out during Jewelry Market Week.

Untitled design.jpg
Brought to you by
The End of an Era? Lab-Grown Diamonds' Journey Towards Price Stability

As the demand for lab-grown diamond jewelry may still be increasing, the most notable change we are likely to see is price stabilization.

QVC HSN logo
MajorsJun 13, 2024
HSN, QVC Parent Company Faces Delisting

Qurate Retail is in the middle of a turnaround plan as it battles declining sales.

Weekly QuizJun 13, 2024
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
45.07-carat step cut fancy vivid yellow diamond
AuctionsJun 13, 2024
45-Carat Yellow Diamond Withdrawn from Phillips Auction

Signed jewels and period pieces stood out at the sale.

Marie Lichtenberg Scapular necklace
TrendsJun 13, 2024
Amanda’s Style File: For the Fathers

Showcase your dad’s personal style with a piece of fine jewelry for Father’s Day.

1872 x 1052 Gemolite.jpg
Brought to you by
Meet Gemology’s Next Generation Microscope: GIA® Gemolite® NXT Professional Edition

GIA®’s most advanced microscope has new features to optimize greater precision and comfort.

The Eden Rose Diamond
AuctionsJun 12, 2024
10-Carat Pink Diamond Sells for $13M at Christie’s

“The Eden Rose” is a fancy intense pink diamond that was appearing at auction for the first time.

Charles & Colvard moissanite ring
GradingJun 12, 2024
IGI to Grade Charles & Colvard Moissanite

The partnership follows the launch of the jewelry company’s B2B moissanite platform.

Bruce Cleaver
SourcingJun 12, 2024
Bruce Cleaver Is Gemfields’ New Chair

The former De Beers CEO will step into the role next month.

Rose cut arch cabochons Columbia Gem House
SourcingJun 12, 2024
State of Colored Stones: Why the Market Is More Colorful Than Ever

As prices of “The Big Three” skyrocket, supply dwindles, and focus on sustainability grows, an age of open-mindedness is dawning.

Edward Arthur Jewelers logo
IndependentsJun 11, 2024
Edward Arthur Jewelers to Close After 53 Years

Owner Randy Brooks, whose brother opened the Maryland jewelry store in 1971, is retiring.

Greenwich St jewelers pride raffle
IndependentsJun 11, 2024
Greenwich St. Jewelers Is Hosting a Pride Month Raffle

Tickets to win a ring are for sale until June 13, with proceeds going to a trans care nonprofit.

National Jeweler columnist Peter Smith
ColumnistsJun 11, 2024
Vegas Musings: Equal Parts Noise and Inspiration

Fresh off Jewelry Market Week 2024, Peter Smith separates the positive—retail and product innovation—from the positively annoying.

Katherine Jetter CASE Award winning ring
Events & AwardsJun 11, 2024
The 2024 CASE Awards Are Open for Entries

Submissions will be accepted now through July 17.

Swarovski New York City flagship
IndependentsJun 10, 2024
State of Retail: 4 Retail Design Trends for 2024

From lighter color palettes to the integration of AR, experts offer inspiration for jewelers in need of an aesthetic refresh.

Van Cleef & Arpels 1929 tie necklace
AuctionsJun 10, 2024
Van Cleef & Arpels Necklace From 1929 Sells for $3.6M at Auction

The rare piece went home with a Sotheby’s executive.

Woman shopping
SurveysJun 10, 2024
Consumer Confidence Rises in May Despite Anxiety About the Future

Expectations of a recession rose for the second consecutive month.

Sotheby’s watch executives Sam Hines and Geoff Hess
WatchesJun 10, 2024
Sotheby’s Makes Changes at Top of Watch Division

Sam Hines returns to the auction house as chairman, watches, while Geoff Hess moves up to the role of global head of watches.

Elephants wading in the Okavango Delta in Botswana
SourcingJun 10, 2024
State of the Diamond Industry: Botswana Beyond Diamonds

From moringa to ecotourism in the Okavango Delta, the country and its leaders are exploring how Botswana can diversify its economy.

Seymour Holtzman
IndependentsJun 07, 2024
Seymour Holtzman of CD Peacock Dies at 88

He was remembered by loved ones as “an authentic, original American entrepreneur.”

45 carat yellow diamond
AuctionsJun 07, 2024
Phillips to Auction 45-Carat Yellow Diamond

The stone features rare step-cut faceting and is estimated to sell for up to $3.5 million.

Tabayer Oera ‘Unity’ Ring
CollectionsJun 07, 2024
Piece of the Week: Tabayer’s Oera ‘Unity’ Ring

Crafted in Fairmined gold with a rainbow of agate, the ring is a joyful symbol of inclusivity, diversity, and solidarity.

INS Show_NJ Supplier eBlast Banner.jpg
Supplier BulletinJun 06, 2024
Join INSTORE This August in Rosemont!

Grab Your Free Show Badge Today. Sponsored by INSTORE

Sarah Alden
IndependentsJun 06, 2024
GoFundMe Launched Following Jeweler’s Murder

Vintage jewelry seller Sarah Alden, 53, died after a brutal attack at the Venice Canals in Los Angeles.

Sylvester Stallone Sotheby’s watch
AuctionsJun 06, 2024
Sotheby’s Auction of Sylvester Stallone’s Watches Was a Knockout

The auction house sold all 11 watches from the “Rocky” star’s collection, with his Patek Philippe Grandmaster Chime setting a new record.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy