Brilliant Earth Beats Estimates Amid Growth in Non-Bridal Jewelry Sales
CEO Beth Gerstein also spoke about the retailer's store count, its resonance with Gen Z shoppers, and more on the company’s Q1 earnings call.
“The first quarter marked our seventh consecutive period of consistently strong performance,” said CEO Beth Gerstein in a statement, touting the company’s ability to drive revenue growth.
Gerstein shared exactly what led to the quarter’s “strong performance,” including the continued success of its non-bridal fine jewelry segment and resonance with younger shoppers, in an earnings call late last week.
Here are five key takeaways from Brilliant Earth’s first-quarter results.
Brilliant Earth’s Q1 sales fell, but still surpassed its expectations.
Net sales in the first quarter, which ended March 31, slipped 2 percent year-over-year to $97.7 million. The retailer had expected net sales of $94 million to $96 million.
The company reported a net loss of $400,000 compared with a net income of $3.4 million in the previous fiscal year’s first quarter.
During the company’s earnings call, Brilliant Earth Chief Financial Officer Jeff Kuo noted a rise in costs related to its showroom network expansion, including the costs of employees, technology, rent, and a higher marketing spend, which likely impacted net income.
Gross profit was $53.7 million, or a 55 percent gross profit margin, compared to $50.1 million, or a 50 percent gross profit margin, in the prior-year period.
The total number of orders rose 10 percent, though the average order value (AOV) fell 11 percent.
The company has noted in previous quarters that sales of non-bridal fine jewelry are on the rise but the category has a lower average price point, which can bring down its AOV.
Bridal jewelry sales are normalizing.
Last year was a strong year for bridal, dubbed the “year of the wedding,” making for tough comparables in fiscal 2023.
“As you’ve heard me say often, bridal is a highly resilient category even as we know we are coming off an unprecedented period for weddings,” said Gerstein.
“While we anticipate some normalizing throughout this year, we are quite competent in our ability to continue to grow both demand and market share.”
The company’s most recent addition to its bridal assortment is its “Mosaics” collection, which mixes and matches fancy diamond shapes for both fashion and bridal jewelry.
The 18-piece collection features both natural and lab-grown diamonds.
Non-bridal jewelry is big business for Brilliant Earth.
Though best known for its bridal offerings, Brilliant Earth has also been expanding its selection of jewelry that’s not strictly for weddings.
It’s branched out into cocktail rings and men’s jewelry and has collaborated with popular designers for new collections, including Tacori and Jade Trau.
“I think we’re at the forefront of introducing thoughtful designers to our customers,” said Gerstein.
During the Valentine’s Day gifting period, the company posted 70 percent year-over-year growth in non-bridal jewelry orders.
Gerstein also noted an increase in the number of customers buying fine jewelry for themselves.
For the holiday, its heart diamond assortment, as well as its personalized and customizable products, were top sellers.
“Fine jewelry is a great category for us to attract new customers into our brand and we’ve seen really good success overall at being able to drive new customers in that category,” she said.
In the previous fiscal year, one-third of its new customers bought non-bridal fine jewelry.
On the topic of lab-grown diamonds, Gerstein said, “We see a lot of opportunity, especially as it relates to fine jewelry and introducing new lab-grown fine jewelry. It’s a way to really broaden the market appeal. We see that it really resonates with our customer base, and I do think that it’s going to be a really nice opportunity we’re able to capitalize on.”
Its store network expansion continues.
Though it started as an online-only business, Brilliant Earth has been expanding its brick-and-mortar presence.
In 2022, the company opened new showrooms in 10 cities, including Houston, Minneapolis, Detroit, and St. Louis.
It kicked off fiscal year 2023 with its 26th showroom opening in Charlotte, North Carolina, and has since opened five additional showrooms in Brooklyn, New York; Tampa, Florida; Pasadena, California; Nashville, Tennessee; and Fairfax, Virginia, bringing the total to 31.
The company plans to have 35 showrooms by the end of the fiscal year, said Gerstein.
She highlighted the company’s opening in Brooklyn’s hip Williamsburg neighborhood, which saw 100 percent of appointments booked its opening weekend.
“We had our eyes on Williamsburg in Brooklyn for some time, as we all know that it’s a vibrant community,” she said. “Our data suggests it would be a great market for us given its popularity with Gen Z and millennials. We opened in a great location on Sixth Street, which is a popular spot for other luxury retailers and direct-to-consumer millennial-focused brands.”
Gerstein noted how its showroom model may change as its store network continues to grow, hinting at the idea of a mall-based showroom.
Brilliant Earth’s stores function as showrooms. They stock a minimal amount of inventory and while customers can see and try on jewelry in the store, they still place their orders online and get the product shipped to them.
CFO Kuo reiterated that this model may change as non-bridal fine jewelry becomes a larger part of its business and its store network expands.
Brilliant Earth sees a bright fiscal year ahead.
For fiscal 2023, Brilliant Earth reiterated its prior guidance of $460 million to $490 million in net sales—up from last year’s total of $439.9 million—with adjusted EBITDA of $17 million to $32 million.
“We are excited about the opportunities ahead and expect the continued success of our strategic initiatives from product innovation and curation to showroom expansion to be drivers of our growth,” said Gerstein in a statement.
“When coupled with the unique qualities of our agile, asset-light business model, we are well positioned to meet our annual goals.”
Kuo noted the company anticipates higher year-over-year revenue growth rates in the second half of the year, due in part to the additional showrooms and the performance of its non-bridal fine jewelry assortment.
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