Brilliant Earth Sees Slight Increase in Q2 Sales
The retailer reported a record-breaking number of orders for the quarter amid strong Mother’s Day sales but average order value declined.
“During the quarter, we delivered our best Mother’s Day gifting performance in our history while also continuing to grow our market share and expanding our showroom footprint,” said CEO Beth Gerstein in a statement.
The retailer plans to have 35 showrooms in total by the end of this fiscal year.
Here are five key takeaways from Brilliant Earth’s second-quarter results.
Brilliant Earth took more orders in Q2 but the average value of each sale was lower.
Net sales in the second quarter, which ended June 30, rose 1 percent year-over-year to $110.2 million.
For the first half of the year, net sales totaled $207.9 million, down slightly from $208.8 million in the previous year.
Net income in the second quarter was $1.2 million, compared to $3.8 million in the previous second quarter.
Gross profit was $63.5 million, or a 58 percent gross profit margin, compared to $57.8 million, or a 53 percent gross profit margin, in the prior-year period.
The total number of orders in the quarter climbed 21 percent, while the average order value (AOV) fell 16 percent. For the first half of the year, total orders climbed 16 percent while AOV fell 14 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 brings down its AOV.
“We delivered a strong second quarter, highlighted by: increased revenue with sustained growth on a four-year CAGR basis; expansion in gross margin and an adjusted EBITDA that exceeded our expectations, reflecting the increasing resonance of our premium brand, the agility with which we execute and the advantages of our asset light, data-driven operating model,” said Gerstein.
In bridal, under $10,000 was a key price point.
Brilliant Earth is faced with tough comps in fiscal 2023, competing with last year’s “year of the wedding” results.
“We entered the year anticipating a degree of normalization in weddings, and we’ve continued to see that play out,” Gerstein said on the company’s earnings call Wednesday evening.
In the second quarter, the brand saw growth in the under-$10,000 price range, noting its growing brand recognition with the millennial and Gen Z audiences.
As the summer wedding season kicked off, it posted double-digit growth in men’s wedding bands, which it touted as a testament to its brand resonances across genders.
“With respect to bridal trends, we are anticipating a return to a more normalization of industry growth rates towards the end of the year,” Chief Financial Officer Jeff Kuo said on the call.
“We are consistently gaining share in the industry, and this is reflected in the strong brand lines that we have, the strong order growth rates that we have. And so that normalization, the continued strength of the brand and traction with millennial and Gen Z customers are embedded in our guidance. We are very well positioned for long-term growth and long-term share gains as we’re still early in the journey of a very large $300 billion industry.”
The retailer turned to social media influencers to boost its bridal selection, tapping Bachelor franchise stars Dean Unglert and Caelynn Miller-Keyes and “Big Brother” cast member Corey Brooks.
As for its bridal offerings, the company’s most recent addition to its bridal assortment was a collaboration with Tacori, introducing the “Lunetta Crescent” bridal jewelry collection in July.
In May, the retailer debuted 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 fine jewelry sales are going strong.
Though best known for its bridal offerings, Brilliant Earth has also been expanding its selection of jewelry outside of engagement rings and wedding bands.
It’s expanded into cocktail rings and men’s jewelry and has collaborated with popular designers for new collections, including Jade Trau.
Most recently, Brilliant Earth partnered with L.A.-based designer Logan Hollowell Fine Jewelry on “Secret Garden,” a new floral-inspired capsule collection featuring all lab-grown gemstones.
“We’re seizing the opportunity to attract new and repeat customers with a thoughtful balance of both classic and on-trend jewelry,” said Gerstein.
In the previous fiscal year, one-third of its new customers bought non-bridal fine jewelry.
Its bestsellers include personalized jewelry, like nameplate necklaces, reversible hoop earrings, wrap rings, and accented chains.
Its store network expansion continues.
Though it started as an online-only business, Brilliant Earth has been expanding its brick-and-mortar presence in recent years.
Most recently, Brilliant Earth opened two new showrooms in Fairfax, Virginia’s Mosaic District in May, and in the Fulton Market in Chicago in June.
It also announced plans for two additional openings in Walnut Creek, California, and in the Coconut Grove area of Miami, bringing its total store count in the United States to 34.
The company plans to have 35 showrooms by the end of the fiscal year.
“We continue to test, learn and refine our showroom experiences, and we’ll soon open our first indoor mall-based showroom in King of Prussia, Pennsylvania, the first of three indoor mall showrooms that will open soon,” said Gerstein.
Though Gerstein acknowledged an indoor mall location is somewhat off-brand for the retailer, which typically opens standalone stores, Gerstein said she’d seen some convincing data.
“We think this is going to give us a chance to launch in some of the best malls in the country and help to see some of the other benefits in terms of driving awareness while still seeing very compelling economics and still offering a really premium customer experience,” she said.
Brilliant Earth is feeling positive about the second half of the fiscal year.
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.
Adjusted EBITDA was raised to $22 million to $35 million from its prior guidance of $17 million to $32 million, boosting its profitability outlook.
The adjustment reflects “a balanced approach of continued prudent investments to gain market share while managing the business for profitability,” said Kuo.
Gerstein looked to the fiscal year ahead with optimism.
“We enter the second half of the year with positive momentum for our brand, strong demand for our distinct and curated bridal and fine jewelry, and continued confidence in our full-year growth goals,” she said in a statement.
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