Store closures have mounted in the US and UK
Jewellery store closures mount
The Global Financial Crisis has had a larger impact on the jewellery industry than first imagined, according to a review of store closures in 2009.
Struggling jewellers have regularly made international headlines over the past year and a review of all the reported closures reveals the US market has been hardest hit by the economic crisis, while the UK has also struggled.
A recent study by IDEX Online, which assessed the performance of US jewellers between March 2009 and March 2010, revealed that 334 jewellery stores closed during that period – a drop of 1.5 per cent.
Last year the US market was plagued by a litany of jewellery chain woes.
The most widely publicised demise has been that of Zale Corp. Crippled by debt, Zale closed 191 of its US stores in 2009, and was reportedly teetering on the brink of bankruptcy before a recent buyout assured the jewellery group’s immediate future.
A steady decline in sales over the past two years was blamed for the company’s financial difficulties.
Jewellery giant Finlay filed for bankruptcy in August 2009. The group owned the Bailey Banks & Biddle, Carlyle and L Congress jewellery chains and operated 106 standalone stores.
Whitehall Jewelers and Friendman’s Inc were also among the first to fall in 2009.
Last week, high-end US jeweller David Webb became the latest company to make headlines after a buying group purchased it. The jeweller, which operates two outlets in America and manufactures from its own factory, filed for Chapter 11 bankruptcy protection in June last year, citing substantial cash flow difficulties and a drop-off in sales brought on by the economic downturn.
Even Australia and New Zealand retail chain Michael Hill has suffered at the hands of the US market, forced to stall its US expansion plans by closing half of its stores there.
There are now nine Michael Hill stores remaining in the US – down from 17 – with the company announcing an expected loss of approximately US$6 million for its US operations during the 2009/10 financial year.
Meanwhile, watch company Movado has given up on US retail altogether, closing its 26 retail specialty stores in the US and focusing on its wholesale business.
In an announcement last month, Movado said the decision to close the retail division was made after several years of unprofitability in the US.
Wholesalers fared even worse than jewellers in the US, with 191 exiting the market according to the IDEX report – a 4.2 per cent drop, while manufacturers declined by 3.2 per cent with 107 businesses closing.
The UK has also experienced its share of woes.
Retail chain Signet, which operates in both the US and UK markets, recently announced closures of 15 stores in the UK, as well as plans to move stores out of traditional high street locations, and into more lucrative shopping centres.
The news came in the wake of the jewellery group’s fourth-quarter trading update, which revealed total sales had dropped by 9.3% in the UK [CORRECTION: Please see Signet update in Your Say below].
Another UK chain – fashion jeweller Diamonds & Pearls – collapsed into administration twice in a year. In March 2009 it was bought out of administration by a consortium of jewellery suppliers after closing 18 loss-making stores. In February 2010, the chain hit the buffers again, closing 36 stores.
Australian jewellery retailers have largely avoided the downturn experienced in the US and UK.
Set against a difficult performance in the US, Michael Hill recently announced t will open a further 15 stores in Australia and New Zealand, while a report published in March revealed Australian jewellery sales had risen 10.3 per cent compared with last year.
Posted July 13, 2010