How the Biggest Jewelers Are Feeling About the Holidays
It’s a mixed bag this season, with some retailers raising their guidance while others worry about the effects of inflation.
During the five-day period from Thanksgiving Day through Cyber Monday, a record 196.7 million Americans shopped in stores and online, up 9 percent year-over-year, according to the annual survey by the National Retail Federation and Prosper Insights & Analytics.
Still, inflationary pressures are threatening to put a damper on the holiday cheer.
Here’s how a few of the major jewelry sellers are feeling about the holidays.
Signet Jewelers: Upbeat and optimistic
Signet Jewelers posted muted overall growth and declining same-store sales in its recent third quarter results, up against last year’s strong Q3.
However, it still raised its fiscal guidance, forecasting a merry holiday season ahead, particularly after its recent acquisitions of Blue Nile and Diamonds Direct.
The company expects fiscal-year sales to be in the range of $7.70 billion to $7.84 billion, up from its prior guidance of $7.60 billion to $7.70 billion, but still lower than its initial forecast shared in June.
Signet said it had a successful Black Friday, and celebrated the biggest Cyber Monday in its history, and believes there is more still to come.
“We are seeing shifts in consumer purchasing patterns that indicate many consumers are waiting until later in the season to complete their shopping,” said Chief Financial Officer Joan Hilson on the company’s most recent earnings call.
Brilliant Earth: Confident but cautious
In contrast, Brilliant Earth had a strong third quarter, posting double-digit growth and marking its fifth consecutive quarter of growth as a public company.
However, it lowered its fiscal guidance in the face of macro headwinds and the “anticipated promotional environment” ahead of the holidays.
On its earnings call in mid-November, CEO Beth Gerstein said the company doesn’t plan to discount the way other retailers might in order to sell their inventory.
Notably, however, Brilliant Earth doesn’t own all of its inventory, giving it a leg up over retailers that have bought merchandise that needs to be moved.
“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,” she said.
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.
“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.
Movado: Bracing for uncertainty
Movado Group saw sales slip in the third quarter, noting that inflation was weighing on shoppers in the United States and Europe.
In light of the “uncertain” retail environment, the company lowered its fiscal-year guidance.
The company now expects net sales in the range of $740 million to $750 million compared with its prior outlook of $780 million to $790 million.
“As consumers in our key markets experience inflationary pressure, we are updating our annual outlook to reflect currency headwinds and a softer spending environment,” CEO Efraim Grinberg said.
“In the United States and Europe, we have seen inflation of everyday goods and higher energy prices begin to take a greater toll on consumers’ purchasing power, and we expect that trend to continue for the balance of this year and into next year,” he added.
This turbulent environment makes it harder to predict how the holidays will go, said Grinberg, noting last year’s holiday season was strong due in part to less competition from travel and dining, which is not expected to be the case this year.
“The consumer was in fantastic shape and they were being urged to buy early or take the risk that retailers would run out of best-selling products. Today, the environment is completely different,” he said.
Richemont: Celebrating with sensitivity
Luxury giant Richemont, the company that owns Cartier, Van Cleef & Arpels and Buccellati, also expressed uncertainty about the retail environment.
The company reported strong results in the first half of its fiscal year, particularly in the jewelry and watch segments, but Chairman Johann Rupert remained unsure about the remainder of the year.
“It is highly uncertain how the political, economic and social landscapes will evolve in Europe and in our other key markets,” he said. “We only know that we will likely face volatile times ahead as central banks seek to rein in inflation while governments try to manage severe cost-of-living pressures.”
In light of the uncertain environment and the ongoing war in Ukraine, the company said it planned to tone down the holiday marketing campaign for at least one of its brands for fear of seeming out of touch.
In November, Cartier CEO Cyrille Vigneron told Bloomberg the brand planned to create a “more subdued” holiday marketing campaign for Europe and possibly the United States.
Macy’s: Enthusiastic but wary
Macy’s posted strong sales in its recent third quarter but left its fiscal guidance unchanged due to the unsettled retail environment.
The retail chain comes in at No. 7 on National Jeweler’s 2021 $100 Million Supersellers list with jewelry and watch sales of $1.64 billion.
In an earnings call in November, CEO Jeff Gennette took a look at the factors impacting holiday shopping and compared this year with previous seasons.
Last year, consumers were “flushed with cash,” he said, and demand was high due to supply chain constraints.
This year, retailers have too much inventory, and consumers know it.
“They are under a tighter budget, feeling the impact of inflation on non-discretionary items and beginning to deplete their savings. With that in mind, we believe they are waiting until closer to holiday to make purchases, especially as there is an extra day, which is a Saturday, between Thanksgiving and Christmas,” he said.
Gennette said the company is expecting to see consumers return to pre-pandemic holiday shopping patterns.
“The holidays are happening. Trips are booked, parties and family gatherings are planned. Consumers will be spending, but it is too early to tell how much they will allocate to our various categories.”
Macy’s is approaching the holidays with “an appropriate cautious stance” given several unknowns, but is still enthusiastic, he said.
Target: Catering to deal-conscious shoppers
Target reported slowing sales in the third quarter as inflation took a toll on customers, leading the retailer to lower its fourth-quarter outlook.
The company is at No. 14 on National Jeweler’s 2021 $100 Million Supersellers list with jewelry and watch sales of $584 million.
In the quarter ending Oct. 29, sales softened, said CEO Brian Cornell, as shoppers battled inflation, rising interest rates, and economic uncertainty.
Cornell noted the company is also up against a significant increase in theft and organized retail crime, which means spending more on safety training and security technology.
As for consumer behavior, A. Christina Hennington, Target’s executive vice president and chief growth officer, noted on the Q3 earnings call that consumers are struggling with rising prices and searching for deals, but still look for affordable luxuries.
“It’s a difficult balance to strike and getting increasingly difficult each week as more and more of their household budget goes toward the needs of the family, which limits the amount available for discretionary purchases,” she said.
“We see our guests holding out for and expecting promotions more than ever, spending less on regularly priced items.”
Though there may be fewer discretionary dollars to spare, shoppers are still looking to celebrate the holiday season, she said.
Target offered week-long Black Friday deals as well “Deal of the Day” offers.
The store is also using strategic partnerships to draw in holiday shoppers, including Disney, Apple, and Ulta Beauty shop-in-shops.
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