Richemont of Cartier and Van Cleef & Arpels fame just delivered spectacular third quarter results, ending December 31 with its luxury jewelry brand revenues up 14%.
By contrast, Signet Jewelers, the nation’s largest jewelry retailer and the world’s largest retailer of diamond jewelry, reported holiday same-store sales declined 2%, as the U.S. accessible jewelry market caved during a highly promotional retail season.
Richemont Roars
Overall, the luxury conglomerate Richemont reported revenues advanced 10% to $6.3 billion (€6.15 billion), dragged down by an 8% decline in watch sales which totaled only $893 million (€867 million). Jewelry was the standout with revenues reaching $4.6 billion (€4.5 billion).
While demand languished in the Asia Pacific market, it boasted double-digit growth everywhere else, including a 22% uptick in the Americas. That suggests Richemont enjoyed heady growth in the U.S. luxury jewelry market since its jewelry brands account for over 70% of total revenues.
Richemont’s strong third report, which beat analysts’ expectations, led to a 17% rise in Richemont shares, its biggest one-day percentage increase ever, according to the Wall Street Journal.
And it gave a boost to European competitors’ LVMH and Kering stocks as well, suggesting that wealthy luxury consumers are coming back after a 2% retreat in personal luxury goods spending in 2024, according to Bain.
Signet Whimpers
Richemont’s results stood in sharp contrast to Signet’s. Its stock dropped nearly 20% this week after announcing on Tuesday holiday same-store sales dropped 2% across its portfolio of accessible and mass-market jewelry brands, including Kay Jewelers, Zales, Jared, Diamond Direct, Blue Nile and James Allen.
Signet’s weak holiday performance caused the company to ratchet down its fourth quarter guidance from $2.38 billion-$2.46 billion to $2.320 billion-$2.335 billion when it reports end of January, early February.
Through the first three quarters of fiscal year 2025, same-store sales are off 4.6% to $4.4 billion, against previous year when same-store sales tanked 12.6% to $4.7 billion.
Blaming the holiday sales shortfall partly on consumers moving toward lower-price points in fashion jewelry and stronger consumer response to promotional items, newly installed CEO J.K. Symancyk said in the statement:
“While there were positives in the underlying business performance during Holiday, I believe we have the opportunity to reshape our customer facing strategies in the areas of marketing, product design and assortment innovation,” he said.
Highly Promotional Holiday
Signet couldn’t compete in a retail market that turned highly promotional over the holiday selling season. For example, Target reported total sales were up nearly 3% in November and December, welcome news after a year of tepid results.
Overall the National Retail Federation (NRF) reported holiday sales rose 4%, excluding automobile, gasoline, and food service retailers. Calling the American consumers “still relatively healthy” – as opposed to really healthy – NRF also said they remain “budget conscious.”
Interestingly, at the recent ICR Conference, Symancyk revealed that in the last ten days of the holiday calendar, Signet sales fell short of expectations. “Those 10 days of the prime gifting window represent a sharp shift from the way the normal volume flows in our business,” he shared.
That suggests potential jewelry gifting customers ran out of their spending runway as the holiday pressed in, turning them to other alternatives. Moody’s Ratings analyst Mickey Chadha observed as much, noting consumers pulled back from “pricier nondiscretionary products,“ i.e. jewelry purchases, in favor of “value and essentials.”
GlobalData’s Neil Saunders shared with NBC that retailers offered more generous discounts this year compared to last to draw customers in. He further cautioned that the real retail story lies underneath the headlines.
“Not every retailer found success over the holidays, and we will see some polarized earnings when retailers start to report,” he cautioned.
Too Soon To Call Luxury Jewelry Back
Signet is one of those disappointments as consumers couldn’t be persuaded to part with cash for more accessible jewelry purchases while the wealthy were more than willing to indulge in high-end luxury purchases from Richemont’s true luxury offerings.
Yet it may be too soon to announce that the luxury jewelry market has overcome headwinds.
Through the first nine months of the 2024 fiscal year, LVMH reported revenues dropped 5% in its Watches & Jewelry group to $8.2 billion (€8 billion) or down 3% on an organic basis.
Though it doesn’t break out reporting between watches and jewelry, it is safe to assume that like Richemont, jewelry is the share leader with its flagship Tiffany & Company and Bulgari brands. Tiffany, in particular, has more exposure to the accessible luxury consumer with its sterling silver jewelry collections.
We’ll have to wait to see if Tiffany’s New York City-centric holiday campaign, “With Love, Since 1837,” moves the needle. In the campaign, actress and brand ambassador Anya Taylor-Joy, of Queen’s Gambit and Furiosa fame, is filmed taking a tour of famous NYC landmarks draped in Tiffany jewelry.
Best guess is Tiffany won’t unlock the accessible luxury consumers’ spending which is in retreat while the true luxury spenders will continue to indulge in top-tier brands, like Cartier, Van Cleef & Arpels and Buccellati, another Richemont brand.
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