Majors

How the Coronavirus Is Impacting the Jewelry Industry

MajorsFeb 13, 2020

How the Coronavirus Is Impacting the Jewelry Industry

Pandora, LVMH and Kering execs reflect on the ripple effects of the outbreak as sales continue to dip.

20200213_Chow_Tai_Fook_Store.jpg
A Chow Tai Fook store in China (Image courtesy of Wikimedia Commons/Wpcpey)

New York—Global health officials estimate the coronavirus outbreak is responsible for 1,300 deaths worldwide as of Thursday, and its effects are rippling through the global economy.

The current outbreak originated in the Wuhan province of China with symptoms similar to the common cold, like fever and cough, but more severe symptoms can develop, such as severe acute respiratory syndrome and kidney failure.

There are more than 60,000 confirmed cases, which have spread from mainland China to 25 other countries and territories.

As the casualty count rises, areas of China have been on lockdown and additional screening measures are underway in airports worldwide in an attempt to contain the virus.

The disease is impacting industries worldwide, including luxury brands, which depend heavily on Chinese consumers today. Investment group Jefferies estimated Chinese buyers made up about 40 percent of the €281 billion ($306 billion) spent on luxury goods worldwide in 2019 and drove 80 percent of the growth, as per a report from the Financial Times.

Here’s how the outbreak, which started at the end of December, has affected the luxury industry so far.

Trade Shows
In an effort to contain the outbreak, jewelry trade show organizers are moving and canceling shows, and taking extra precautions for those events scheduled to go on as planned.

The Hong Kong International Diamond, Gem & Pearl show and the Hong Kong International Jewellery Show, both scheduled for March, have been moved to May.

The AEC Gems & Jewelry Presidents’ Summit, which is held by the Hong Kong Jewellery & Jade Manufacturers Associations, has been postponed as well to a soon-to-be-announced date.

Swatch cancelled its “Time to Move” event, scheduled for late February/early March in Zurich, Switzerland, in order to “prevent their partners from travelling internationally in an insecure climate.”

And Alrosa announced last week that it would be relocating its March auction of special-size rough diamonds from Hong Kong to Moscow.

In contrast, the organizers of the upcoming Bangkok trade show will not be changing their plans because of the outbreak.

The 65th Bangkok Gems and Jewelry Fair, scheduled for Feb. 25-29 at the Impact, will go on as scheduled.

In a letter shared with National Jeweler, Somdet Susomboon, director general of Thailand’s Department of International Trade Promotion, outlined what the country is doing, and will do, to ensure visitors’ health and safety during the show.

Precautions include installing thermal scanners and infrared thermometers to identify potentially infected people; spraying disinfectant at the fairgrounds;

providing hand sanitizer at all entrances, toilets and meetings rooms; providing masks; and setting up a coronavirus screening unit.

Outside of the jewelry world, the Formula 1 Chinese Grand Prix in Shanghai and Olympic qualifier events have been postponed as well.

Pandora
Pandora suffered a rough fourth quarter as sales in China showed continued weakness.

In an interview with Reuters, CEO Alexander Lacik said the Danish jeweler has seen an “unprecedented” drop in business in China as a result of the coronavirus.

“As I sit here and watch the Chinese business, it is in a standstill mode; I mean there’s pennies being sold,” he said.

Lacik said 70 of its 240 stores in China have been closed by order of the government and customer traffic at its open stores “is next to none.”

“For Pandora, as well as many retailers with a presence in China and Hong Kong, the outlook for the year depends greatly on how the coronavirus epidemic unfolds and, of course, whether cases start to ramp up in Europe and the U.S. where, up to now, cases have been few,” Nigel Frith, a senior market analyst at AskTraders.com, noted in an email to National Jeweler.

Looking to the year ahead, Pandora expects like-for-like sales to remain in the red with organic growth also decreasing.

LVMH
LVMH ended the year on a strong note, posting double-digit revenue growth even as protests in Hong Kong weighed on the second half of its fiscal year.

The company’s brand portfolio includes Louis Vuitton, Christian Dior, Bulgari and Hublot.

CEO Bernard Arnault addressed the potential impact of the coronavirus on China, a key market across all sectors, in an interview with reporters following the results.

Arnault said Chinese authorities told him the peak of the virus is expected to pass within weeks and the situation is expected to settle down by the end of March.

“If it dies out in two months or two months and a half, it’s not terrible. If it takes two years, that’s a different story,” he said.

LVMH said it is “cautiously confident” about the new year, citing “an uncertain geopolitical context.”

Kering
Kering, the luxury titan behind brands like Gucci and Balenciaga, posted strong results in its quarterly report Wednesday.

The company reported double-digit revenue growth overall in its fourth quarter and full year as well as in its jewelry houses, which include Boucheron and Pomellato.

On an earnings call, CEO François-Henri Pinault said the environment in China had “changed significantly” in the wake of the coronavirus outbreak.

He said about half its stores in the country are closed and those that remain open have seen a slowdown in traffic and shortened operating hours, leading to a “strong drop” in sales.

Events, product launches and store openings have been postponed in the area while inventory is being moved out of the country to other regions.

“Due to the evolving nature of the situation, it is impossible at this time to fully evaluate the impact on our businesses and how fast they will recover,” he said.

Kering did not provide guidance for 2020 but said it “remains confident” in its growth potential.

“The underlying strength of the business bodes well for the second half,” Jefferies analyst Flavio Cereda told the Financial Times, but noted that more information on China is needed.

Gold
Gold jewelry sales in China are expected to sink this year as a result of the coronavirus outbreak.

“People are not in the mood to shop for jewelry,” Zhang Yongtao, chief executive officer of the China Gold Association, said in an interview with Bloomberg.

Yongtao said he expects the sales of gold jewelry and bars to drop substantially this year.

“We have seen in China, particularly over the Lunar New Year, empty streets and deserted shopping malls. Quite simply, people don’t want to be in public spaces unnecessarily for fear of contagion,” noted Frith, the AskTraders.com analyst.

He added that if cases were to emerge in the U.K., whose economy is already fragile due to Brexit uncertainty, a similar slowdown in spending would arise there.

Research firm Metals Focus forecast a 6 percent decline in gold jewelry sales in China this year, but said it would “not be surprised if that projection proves too optimistic.”

The drop in jewelry sales may be particularly sharp as the outbreak has disrupted Chinese New Year, which is usually the busiest period for gold sales.

In addition, a slowing economy and weak growth in disposable income translates to less money for consumers to spend on discretionary items, like jewelry.

The report noted that even before the outbreak, the jewelry industry was facing headwinds, including weak consumer sentiment, a shift to smaller designs, and a sharp rise in gold prices, which could continue.

Investors tend to favor safe-haven assets like gold during periods of uncertainty, so if the outbreak were to develop into a pandemic, it may push up gold prices considerably

From a manufacturing standpoint, the Hong Kong Jewelry Manufacturers’ Association told Bloomberg that operating efficiency at Chinese factories may be around 20 to 30 percent as workers remain at home.

The association expressed concern about orders from mainland China dropping.

“In my 40 years in the jewelry industry, I have never seen the entire Chinese market ground to a halt like now,” said Chairman Benny Do.

Do estimated that retailers’ sales volumes of gold jewelry may decline 70 percent year-over-year in the first quarter.

Health experts recently convened at the World Health Organization’s Geneva headquarters for a two-day forum to strategize on how to stop the coronavirus outbreak and prevent another in the future.

“This outbreak is a test of solidarity—political, financial and scientific. We need to come together to fight a common enemy that does not respect borders, ensure that we have the resources necessary to bring this outbreak to an end and bring our best science to the forefront to find shared answers to shared problems,” WHO Director-General Dr. Tedros Adhanom Ghebreyesus said in a statement.
Lenore Fedowis the senior editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

The Latest

Pomellato Nudo toi et moi ring
FinancialsApr 25, 2025
Kering’s Jewelry Brands Persevere as Q1 Sales Sink 14%

Boucheron and Pomellato performed well in an otherwise bleak quarter for Kering amid struggles at Gucci.

Deborah Meyers Experience The Birds Earrings
EditorsApr 25, 2025
Piece of the Week: Deborah Meyers Experience’s ‘The Birds’ Earrings

Designer Deborah Meyers created her birds from oxidized sterling silver, rose-cut diamond eyes, and Akoya Keshi pearl feathers.

Melee diamonds from De Beers
SourcingApr 25, 2025
De Beers Sales, Production Fall in Q1 Amid Uncertainty

The company said it expects sightholders to remain “cautious” with their purchasing due to all the unknowns around the U.S. tariffs.

ejap cohort 1872x1052.png
Brought to you by
Emerging Jewelers Accelerator Program Announces Second Cohort of Aspiring Jewelry Entrepreneurs

Six new retail businesses were selected for the 2025 program, which began in January.

LIM-401 2024 National Jeweler Supplier Bulletin- iD100 Web and Eblast FINAL (1).jpg
Supplier BulletinApr 24, 2025
Protect Your Customers and Your Business

Sponsored by the Gemological Institute of America

Weekly QuizApr 24, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Wolf CEO Simon Wolf
EditorsApr 24, 2025
Q&A: Wolf’s CEO Talks U.S. Expansion

Simon Wolf shares why the time was right to open a new office here, what he looks for in a retail partner, and why he loves U.S. consumers.

Iowa jeweler Herman Ginsberg
IndependentsApr 24, 2025
Longtime Iowa Jeweler Herman Ginsberg Dies at 99

A third-generation jeweler, Ginsberg worked at his family’s store, Ginsberg Jewelers, from 1948 until his retirement in 2019.

gia1d100 btyb.jpg
Brought to you by
Protect Your Customers and Your Business

The risk of laboratory-grown diamonds being falsely presented as natural diamonds presents a very significant danger to consumer trust.

Charles & Colvard moissanite ring
FinancialsApr 24, 2025
Charles & Colvard Delisted From Nasdaq Due to Noncompliance

The company failed to file its quarterly reports in a timely manner.

Young Diamantaires
SourcingApr 24, 2025
Young Diamantaires Transition to Nonprofit

The organization also announced its board of directors.

Mined + Found "Hope" Matchbox Locket
TrendsApr 24, 2025
Amanda’s Style File: So Charming

Charms may be tiny but with their small size comes endless layering possibilities, from bracelets to necklaces and earrings.

Jason McNary accepting FGI Fine Jewelry Rising Star award for Paola Sasplugas
Events & AwardsApr 23, 2025
PDPaola Creative Director Wins FGI’s ‘Rising Star’ Award

Paola Sasplugas, co-founder of the Barcelona-based jewelry brand, received the Fine Jewelry Award.

1999 Cosmograph Daytona, Ref.16516
AuctionsApr 23, 2025
Rare Custom Rolex Daytona Heads to Auction

A platinum Zenith-powered Daytona commissioned in the late ‘90s will headline Sotheby’s Important Watches sale in Geneva next month.

Woman wearing Zales jewelry
MajorsApr 22, 2025
Zales’ Rebrand Takes Playful Approach to Fine Jewelry

The Signet Jewelers-owned retailer wants to encourage younger shoppers to wear fine jewelry every day, not just on special occasions.

JAR Apricot Blossom bracelet
AuctionsApr 22, 2025
Christie’s to Auction JAR Jewelry Collection

The 21 pieces, all from a private collector, will be offered at its Magnificent Jewels auction next month.

National Jeweler columnist Lilian Raji
ColumnistsApr 22, 2025
The PR Adviser: Building Buzz Through Word of Mouth

Lilian Raji answers a question from a reader who is looking to grow her jewelry business but has a limited marketing budget.

Avi Levy
GradingApr 22, 2025
Avi Levy Is GCAL By Sarine’s New Chief Growth Officer

GCAL by Sarine created the new role to sharpen the company’s focus on strategic partnerships and scalable expansion.

Scottsdale Fine Jewelers store exterior
IndependentsApr 22, 2025
Brinker’s Jewelers Acquires Fellow Independent

The Indiana jeweler has acquired Scottsdale Fine Jewelers in Scottsdale, Arizona.

Cartier Exhibition Installation at Victoria & Albert Museum
Events & AwardsApr 21, 2025
An Exhibition Exploring the History of Cartier Is Now on Display

“Cartier: Design, Craft, and Legacy” opened earlier this month at the Victoria and Albert Museum in London.

Bill and Birdie Levine of Van Cott Jewelers
IndependentsApr 21, 2025
New York Jeweler to Close After 111 Years

Van Cott Jewelers in Vestal, New York, is hosting a going-out-of-business sale.

IJO Director Samantha Larson
IndependentsApr 21, 2025
IJO Names New Director of Vendor Relations, Merchandise Strategy

Industry veteran Samantha Larson has held leadership roles at Borsheims, McTeigue & McClelland, Stuller, and Long’s Jewelers.

Events & AwardsApr 21, 2025
Jewelers of Louisiana, Mississippi Jewelers Association to Co-Host Convention

The two organizations will hold the educational event together this fall in Mississippi.

Daymond John
Events & AwardsApr 18, 2025
Daymond John to Give Keynote at JCK Las Vegas

The entrepreneur and “Shark Tank” star will share his top tips for success.

Dukachi Easter Bread Pendant
CollectionsApr 18, 2025
Piece of the Week: Dukachi’s ‘Easter Bread’ Pendant

The Ukrainian brand’s new pendant is modeled after a traditional paska, a pastry often baked for Easter in Eastern European cultures.

Bremer Jewelry
IndependentsApr 18, 2025
Bremer Jewelry to Reveal Renovated Store

The jeweler has announced a grand reopening for its recently remodeled location in Peoria, Illinois.

Tiffany & Co. Strong Like Mom campaign
MajorsApr 18, 2025
Tiffany & Co. Employees Star in Mother’s Day Campaign

The “Strong Like Mom” campaign features moms who work at Tiffany & Co. and their children.

Athena Calderone x John Hardy Collection
CollectionsApr 17, 2025
John Hardy, Athena Calderone Partner on Art Deco Decor-Inspired Collection

Interior designer Athena Calderone looked to decor from the 1920s and 1930s when crafting her first fine jewelry collection.

×

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