Good Holiday Business Buzz Growing

November 10, 2003

Good Holiday Business Buzz Growing

Economic indicators are increasingly positive for a good jewelry holiday selling season. Jewelry retail stocks like Tiffany & Co. and Zale Corp. are soaring. Also, October sales were up significantly at luxury retailers such as Saks, Nordstrom and Neiman Marcus. Finally, many retailers are boosting holiday hiring, some for the first time in three years.

Tiffany & Co.'s stock price doubled this year, and is up almost 28% in the past month. It currently has a price-to-earnings ratio of 34. Zale Corp.'s stock is up almost 64% for the year, and has shot up almost 18% since Sept. 30. It has a current P/E of 14.

October sales news was cheery for upscale department stores that sell significant amounts of fine jewelry, such as Neiman Marcus, which enjoyed comparable store sales increases of 9.7% over the same month last year, with Saks up 4.1% and Nordstrom up 3.5%. Lower end department stores didn't fare as well, with Sears, J.C. Penney, Kohl's and others reporting declines. Stephen Hoch, a marketing professor at University of Pennsylvania's Wharton School told the Wall Street Journal "the lower end can't seem to find its customer." Analysts also guessed the positive results at upscale stores were due to wealthier consumers' reaction to the ongoing rally in the stock market.

Due to retailers' greater need for pre-holiday employees, says WSJ, the recent good news about declining unemployment should continue. The newspaper's survey of retailers showed that luxury leather goods company Coach, for example, is planning to double its workers from last year. Gap Inc.'s seasonal help is up one-third over last year and it has boosted training hours. Other retailers haven't increased sales help, but have stopped cutting staff.

Many retail forecasters are calling for overall sales growth ranging from 3-7% this year over last year. The National Retail Federation recorded only a 2.2% overall sales increase at the end of the 2002 holiday season. Ken Gassman, director of research for The Rapaport Group, predicts the jewelry industry will experience increases of 6-7% from last year. If anything, the one worry many analysts continue to have is whether retailers will have enough stock on hand to manage the expected surge in buying.

by Peggy Jo Donahue

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