Lower Pricing on Melee Diamonds - Stuller

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N E W SJA 2008 Cost of Doing Business SurveyJewelers of America, the national association of retail jewelers,has released the JA 2008 Cost of Doing Business Survey, whichanalyzes member stores’ financial data from 2007. The Survey,which has been published annually for 17 years, represents the mostcomplete and historical comparative financial information availableto specialty jewelers in the U.S. It compiles data from a crosssection of jewelers, including independent high-end firms (22.6%),independent mid-range firms (36.5%), jewelry chains (7%) anddesigner/custom jewelers (11.8%).Profitability was down in 2007, with specialty retailersexperiencing a median 4.6% net profit as a percent of net salescompared to last year’s 5.3% [Chart 1]. Gross margins were 48.7%,down from an increase of 49.1% in 2006. Results once again variedby type of specialty jeweler, with independent high-end retailersseeing their margins improve slightly to 45.2% (versus 42.9% in2006), while chains and designer/custom firms were pressured bylower margins. Gross margins at independent mid-range stores weresteady from year to year.Sales Growth & ProfitFor Jewelers of America members, 2007 produced mixed results. Therewas growth among designer/custom, independent high-end and chainretailers; while mid-range independents saw real declines. Overall growthwas essentially flat for the first time since 2001 and 2002, coming in at-0.3% on average (down from 4.1% in 2006). Designer/custom retailersfared best with a 6.1% sales increase over 2006. Independent high-endretailers saw growth of 3.5%, but that was down from 2006, when theChart 1. Net Profit as Percent of Net Salescategory wasup 7.4%.Chain storesexperienced2.5% salesgrowth, whilemid-rangeretailers weredown 1.7%compared to2006 sales.Chart 2. Comparative Financial& Operating RatiosHigh-Profit vs. Low-Profit FirmsChart 3. Comparative Income Statement High-Profit vs. Low-Profit FirmsShare of SalesThe Survey shows that the distribution of sales remained consistentfrom year to year. Diamonds (loose and set) are still in the majority,with 52% of sales, up 2% from 2006. The next biggest productcategories are colored stone jewelry (10% of sales) and karat gold (8%).Repair sales continue to be important, bringing in 11% of sales, up 1%from 2006. Sales of timepieces went from 4% of sales to 3% of sales,compared to 2006.High-Profit vs. Low-Profit StoresThe JA 2008 Cost of Doing Business Survey proves that effectivemanagement can make the difference between a high-profit and a lowprofitfirm. While high-profit stores in 2007 did not have greater salesper store ($1,179,108 on average compared to $1,214,544 for low-profitstores), they did have higher sales per full-time employee, with lowerpayroll and operating expenses. Also, high-profit stores had a 20%greater inventory turnover than low-profit firms [Chart 2].High-profit retailers contained their operating expenses in 2007by spending a lower percentage of net sales on payroll, occupancy,advertising and other related expenses. They spent 6.5% less on totaloperating expenses than low-profit companies [Chart 3]. “It is clear thathigh-profit jewelers do many things just a little better than their lowprofitcompetition,” says industry analyst Ken Gassman, who Jewelers ofAmerica commissioned this year to do a supplementary analysis of theSurvey, entitled JA 2008 Cost of Doing Business Survey: An Analysis.In his analysis, which will be included with each JA 2008 Cost ofDoing Business Survey, Gassman observes that while financial resultsfor 2007 were less robust, the business is cyclical. “It wasn’t a bad yearin 2007; rather, it was clear that the industry hit its ‘high water’ markin 2006, and the tide began to recede in 2007, a trend that continuestoday,” he says.Gassman’s analysis not only looks at this year’s numbers, but alsooffers a historical perspective. Retailers may yearn for the “good olddays” of more prosperous times, but he says a look at the JA 1998 Costof Doing Business Survey (which reviewed 1997 data), reveals a differentstory. “Ten years ago, jewelers’ gross margins were lower; their storeswere large, inefficient…and, sales per store were a fraction of currentlevels,” he notes. | the stuller standard | www.stuller.com APRIL 2009
The Industry’s Guardian of Ethics and IntegrityN E W SIs Your Store’s Advertising Legal?Guide to Advertising Law ReleasedA new publication, The Essential Guide to AdvertisingLaw, contains basic rules and up-to-the-minute legalinformation for jewelers.Developed by the Jewelers Vigilance Committee (JVC),the Guide contains Federal Trade Commission guidelines,rules about price advertising,advertising on the Internet, green,Fair Trade and ethical conductJewelers Vigilance CommitteeThe Essential Guide to claims, and your liability and howAdvertising Lawthe rules are enforced.“JVC’s new advertising law guidewas developed specifically forjewelry retailers, manufacturers,wholesalers, designers and others25 WEST 45TH STREET, SUITE 1406, NEW YORK, NY 10036in the fine jewelry field. In today’s212-997-2002 | 800-JOIN JVC | FAX: 212-997-9148 | www.jvclegal.orguncertain economy, all jewelersmust be particularly vigilant about following the lawspertaining to the manufacture, sale and advertising offine jewelry. Using JVC’s new advertising law guide canhelp jewelers to protect their businesses, reputations andintegrity,” says Cecilia L. Gardner, JVC’s president, CEOand general counsel.This guide was sponsored with a generous gift from theGE Money Team.“GE Money encourages all fine jewelers to utilize JVC’slegal compliance products and services,” says ReginaLeadem, VP sales, GE Money.The Guide is $14.95 for JVC Members, $29.95 for nonmembers,and it is available from www.jvclegal.org. Inaddition, you will find a multitude of legal complianceproducts and services on the website as well as informationabout how to join JVC in 2009 at 2008 rates.Bench Jewelers ConferenceThe 6th Annual Bench Jewelers Conference will be heldApril 23 - 25 at the Millennium Hotel in St. Louis, MO.For more information visit www.BenchConference.com.Tradeshows…Survey, from p6April 1–4, AGS Conclave(Members Only)Hyatt RegencyChicago, ILApril 19–21, InStoreNavy PierChicago, ILBooth 1400,1402,1404,14061501,1503,1505,1507April 27–30Bench Jewelers Conf. & ExpoMillennium HotelSt. LouisMay 30–June 2, JCK Las VegasSands Expo & Convention CenterPlumb Club Pavilion, Level 2, BoothPC 43Booth 60007 Tools; Booth 60008PackagingAPRIL 2009July 15–16, National PawnbrokersBally’s Las VegasLas Vegas, NVBooth TBAJuly 26–29, JA New York - SummerJacob K. Javits Convention CenterCrystal PalaceAugust 1–4RJO Buying Show, KentuckyBooth TBAAugust 4–7, CMNSomerset, NJGarden State Exhibit CenterBooth TBAAugust 12–14, SJTAAtlantaCobb Galleria CentreBooth 1429-39, 1528-38, 1430-32,1535-37Jewelers of America Cost of Doing Business Survey:Crucial to Managing Business“Reviewing Jewelers of America’s 2008 Cost of DoingBusiness Survey can help retail jewelers generate greaterprofits,” says JA Director of Education David Peters,“because it helps storeowners better understand the basicmeasures used to gauge the performance of a business.”“The survey also allows retailers to compare their store’sperformance with industry averages. You can quicklyidentify your strengths and weaknesses and develop strategicaction plans to support future growth and improvements,”continues Peters.Jewelers of America’s 2008 Cost of Doing BusinessSurvey contains 77 pages of data tables organized by thefour categories of specialty jewelers. To order the 2008Cost of Doing Business Survey, visit www.jewelers.org orcall Jewelers of America at 800-223-0673. It is availableto Jewelers of America members for $24.95 and nonmembersfor $150.www.stuller.com | the stuller standard |
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