Macroeconomic Uncertainty Tempers Diamond & Jewellery Demand Expectations For H2 2022

Diamond industry analyst Paul Zimnisky sheds light on how the global economy is impacting diamond and jewellery sales and reveals expectations for the second half of the year.

In H1 2022, central banks around the world began to rein in the massive amounts of financial liquidity provided during the pandemic and they are under pressure to continue to do so due to multi-decade-high inflationary pressures.

For instance, in mid-June, the US’s Federal Reserve raised its Federal Funds interest rate target by 0.75% to a range of 1.50-1.75% – it was the first time the Fed increased rates by >0.50% since 1994. In March and May, the Fed raised rates by 0.25% and 50%, respectively – with the March hike being the first since December 2018.

Paul Zimnisky

Current conditions have led The World Bank to downgrade its 2022 global real-GDP growth forecast to 2.9% from a previous 4.1% noting that “high global inflation accompanied by tepid growth (could result in a scenario) reminiscent of the stagflation of the 1970’s.” The Bank is forecasting global growth of 3.0% in 2023 and 2024, which compares to the recent high-water mark of 5.7% in 2021.

Stagflation, an economic scenario where growth is slowing while inflation is rising, squeezes consumers and it will impact diamond and jewellery consumption, especially the longer it persists.

During a recent Richemont analyst presentation, the company’s storied chairman, Johann Rupert, candidly said “in 1987, I saw stagflation in America… (and I can tell you) it’s a nightmare for industrialists (and for) the real economy.” He continued, “the central banks of the world have behaved irresponsibly…they have created too much liquidity…(and) I think that for Europe, the US, Japan, we are going to have a dose of reality.”

The Collerette Mystérieuse transformable necklace in gold set with rubies, pink sapphires and diamonds, by Van Cleef & Arpels.

Over the last six-months, shares of Richemont, the parent of high-jewellers Cartier and Van Cleef & Arpels, are down 35%. Shares of LVMH, the world’s largest high-end luxury conglomerate and parent of Tiffany & Co., are down 25%. Shares of Signet Jewelers, the US mid-market major, are down 50%.

Despite the drawdown in the stock, Signet has not cut guidance this year and the company is still forecasting year-over-year sales growth of 4% for the fiscal year ending January 2023 – of note, some of that grow expectation is non-organic, i.e. due to an acquisition the company made in the second half of last year.

During an analyst call in June, Signet management said the current guidance reflects “a level of consumer pressure… similar to what is currently being experienced… (but it) does not include a material worsening of macroeconomic factors.”

Richemont and LVMH do not provide sales guidance, however, worthy of note, (very) upscale furniture company, Restoration Hardware, cut year-over-year sales guidance on June 29 to -2 to -5%, from a previous 0 to 2%, for the fiscal year ending January 2023.

The company attributed the change to mortgage rates that are double last year’s levels, luxury home sales that are down 18% in the last quarter and the Fed’s forecast for another 175 basis point rate hike by year end – with management noting: “our expectation is that demand will continue to slow throughout the year.”

In China, Chow Tai Fook, greater China’s largest jeweller, provided a mid-quarter update showing that sales declined 13% in April and May (combined), relative to a year ago. The Chinese market has been impacted by a new wave of pandemic-related lockdowns in recent months – and in mid-June, parts of Shanghai and Beijing faced newly imposed lockdowns after previous restrictions were eased in May.

Chow Tai Fook’s smaller competitor, Luk Fook, recently noted similar performance, but also said that it still expects to achieve year-over-year “double-digit” sales growth in the fiscal year ending March 2023 helped by a “relaxation of the lockdown measures in the Mainland.”

Paul Zimnisky, CFA is an independent diamond industry analyst and consultant based in the New York metro area. For regular in-depth analysis of the diamond industry please consider subscribing to his State of the Diamond Market, a leading monthly industry report; an index of previous editions can be found here. Also, listen to the Paul Zimnisky Diamond Analytics Podcast on iTunes or Spotify. Paul is a graduate of the University of Maryland’s Robert H. Smith School of Business with a B.S. in finance and he is a CFA charterholder. He can be reached at and followed on Twitter @paulzimnisky.

Disclosure: At the time of writing Paul Zimnisky held a long position in Lucara Diamond Corp, Star Diamond Corp, North Arrow Minerals Inc, Brilliant Earth Group and Barrick Gold Corp. Please read full disclosure at

Paul Zimnisky

Paul Zimnisky, CFA, is a leading global diamond industry analyst based in the New York City metro area specializing in global diamond supply/demand fundamentals and the companies operating within the industry.

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