Archive for Zale
Q&A: Looking for a Great Deal on a 1.50 or 1.70+ Princess Cut for Under $9500
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Q: I am shopping around for a 1.5 carat Princess cut diamond, solitaire ring. My girlfriend was roped in by salesmen at Zales and loves the Celebration diamond they sell. I do not have the budget for a $13,000 ring, but would like to find something with an excellent cut to maximize brilliance. My budget max is $9500 but I am looking for a good deal. I have looked through diamonds at James Allen and Blue Nile. I was curious what you could find for me. Thanks in advance for your help.
From Gerson Lehrman Group:
For those of you who follow my blog, you know already that I’m a big fan of jewelry industry analyst Nicholas White from the Gerson Lehrman Group. This time, he writes about how critical consumer credit is for the retail jewelry business, and how, unfortunately, at this time, consumer credit is plummeting at record rates. He believes this will make any Fall recovery for the jewelry business highly unlikely. Zales, who he claims pioneered easy customer credit in the business, reports that approximately 41% of purchases are made using its revolving 3rd party credit card program. Sterling Inc, parent company to Kay Jewelers and Jared Galleria of Jewels, reports about 53.2% of purchases made with the company’s own in-house credit card in FY 2009.
That was a 60 base point increase over the previous year. The company attributed that increase to “higher level of applications offset by a significant increase in the level of credit applications rejected,” despite last years sales decline. Unfortunately, Signet’s US brands may not have the luxury of an increased level of credit applications this Christmas season if the credit contraction continues or worse yet, deepens.
That’s exactly what some analysts expect to happen this fall, “believ[ing] consumer spending declines have only just begun.” They back this up saying, “personal incomes and real incomes have had steeper declines than most had expected” as well as point to the fact that “wages and salaries have also declin[ed] by 4.7% from June 2008 to June 2009”.
However, this isn’t just a problem for Signet and Zale. Credit is an important part of almost all modern mid-price jewelry companies business. Clearly, this contraction will have a material effect on jewelry sales, especially the higher price point diamond ones. Concluding, “based on what I [analysts] see, which is beyond the headline numbers, there are growing, not shrinking, problems that have yet to come to light. Government spending will only create a short-term improvement before it is exhausted. Ditto!
Zale Debuts their own Little Blue Nile Killer
Posted by: | CommentsFrom National Jeweler:
Zale Diamond Corporation has debuted a new section on their website called the “Prestige Diamond Collection.” It’s billed as an “online custom engagement ring service,” which seems like fancy talk for the same “build your own ring” feature that just about every other online diamond vendor has been offering for years already. A quick look at their site does reveal some impressive features. They seem to have a very large selection of rings broken down in three categories: Solitaire, Solitaire with Side Stones, and Vintage. Each style is available in a host of different metals (14K and 18K Yellow and White Gold, Platinum, and Palladium). But that’s pretty much where the accolades end. Unfortunately, the diamond selection is filled with the same garbage you would expect to find in a mall store. I scrolled down to some 1 carat diamonds in the $3800 range and almost wretched when I saw an I SI2 diamond with a 78% depth (yes, that’s right 78% depth! That’s awful for a princess cut. For a round diamond, it’s a crime). It has a diameter of 5.61×5.53. Thats about the proper diameter of a nicely made 0.60 pointer. I’ve seen some very ugly one carat diamonds in my day, but I don’t think I’ve ever seen one this bad.
To be fair, they do seem to have some nicer diamonds mixed in, but it’s precisely this “mix” that is what’s so troubling. There’s no cohesive message being broadcast here. On the one hand, it’s called the “Prestige Collection,” but on the other hand, they’ve got complete garbage diamonds mixed into their list.
Bottom Line Recommendation: Stay away. Buy from the more reputable online vendors. Their diamonds are better, and their profit margin is less. Feel free to contact me if you have any questions.
Analyst Sees Little Hope for Zale Turnaround
Posted by: | CommentsFrom Gerson Lehrman Group:
Analyst Nicholas White takes the latest of many recent managerial reshuffling moves as a further sign that Zale is going nowhere, fast. The new management is hoping for a turnaround in FY 2010, which includes Christmas 2009. Mr. White argues this is highly unlikely as this Holiday Season will prove to be particularly difficult as price competition will become quite fierce as all the struggling jewelers in the market fight over the fewer and more price sensitive customers in the market.
Simply put, Zale management has backed itself into a dismal corner, in part because of the recession, but, primarily because of the accumulation of bad decisions.
