High-end jewelry retailers, like Tiffany & Co. and Zales, are declining much faster than the jewerly industry as whole, according to industry research firm IBISWorld. Although it is definitely a lacklustre year for these companies, Tiffany has a strong management team and therefore will likely perform better than its high-end competitors.
“There are definitely more declines for Tiffany and the jewelry industry ahead, but it’s likely that Tiffany will not perform as badly as Zales, whose yearly losses are nearing $100 million,” explained Toon van Beeck, senior analyst with IBISWorld. “Tiffany might just turn in a profit this quarter; relatively small, but at least a profit.”
Both jewelers are performing poorly in this economic environment, with sales and profits slumping dramatically in most recent quarterly fillings. However, Tiffany’s last quarterly filing (fourth quarter 2008) indicated that the company still managed to make a profit ($31 million), while Zales experienced a net loss (about $23.6 million) for the same three month period. Operating declines continue for Zales as the company announced a $23.2 million net loss in its latest quarterly filings, released May 27.
Holding 4.1 percent market share in both jewelry manufacturing and retailing, two high-risk industries, Tiffany is facing difficult conditions in 2009. Industry growth rates will not be strong until 2011, but there should be a significant boost in the fourth quarter of 2009, compared to the tough Christmas trading period of 2008.