Was The Price Right?

Holiday Sales Plunge   
Most jewelers expected Christmas sales to be down as the economy softened this summer.  Luxury sales were still modestly growing then and industry analysts thought sales would grow about 3% in the holiday quarter.  That was then. Now Christmas is over and almost everybody got it wrong.  Jewelry sales weren’t just down, but plunged more than in any time since the 1950’s.  According to a recent National Jewelry survey, 85% of jewelers said their business was either flat or down from last year during the November 1st –December 24th period.  Incredibly, 65% said holiday season sales declined by more than 10%, in contrast to only 4% reporting sales greater than10%.  What the final tally will be isn’t certain, but Tiffany’s early warning may be prophetic when Reuters reported that the leading luxury jewelry retailer “forecast U.S. same-store sales to decline 25 percent to 30 percent in the fourth quarter”; that despite launching its first off-price marketing campaign since Avon sold the company in 1984.

2009 Sales Will Decrease Too
Earlier, RJI™ cautioned that one in three jewelry stores could experience a 20% decline in sales during the holiday season if discounting accelerated and the economy didn’t improve.  That indeed appears to be what has happened.  Now we believe current sale declines will continue for most, if not all of 2009.  According to some analysts, the economy is in an “unprecedented freefall”.  Surveys taken between November 20th and December 1st of over 3,000 American corporations show a worsening trend for achieving sales budgets, plans for new hires, credit availability, and capital spending.  In particular, more than 50% of the businesses polled said that their company was below [revised] sale plans. Not surprisingly, only 8% said they planned to hire new staff in 2009...