{"id":18170,"date":"2022-11-14T22:41:01","date_gmt":"2022-11-14T17:11:01","guid":{"rendered":"https:\/\/gjepc.org\/solitaire\/?p=18170"},"modified":"2022-11-14T22:41:05","modified_gmt":"2022-11-14T17:11:05","slug":"despite-dour-sentiment-diamond-demand-could-surprise-as-2022-draws-to-a-close","status":"publish","type":"post","link":"https:\/\/gjepc.org\/solitaire\/despite-dour-sentiment-diamond-demand-could-surprise-as-2022-draws-to-a-close\/","title":{"rendered":"Despite Dour Sentiment, Diamond Demand Could Surprise As 2022 Draws To A Close"},"content":{"rendered":"\n

A couple of weeks into the all-important Holiday Season, diamond analyst Paul Zimnisky<\/strong> examines diamond demand going into the year-end.<\/h4>\n\n\n\n

Global inflation, which has reached multi-decade highs this year, as well as expectations for a potentially severe economic slowdown, is impacting the discretionary spending of diamond consumers.<\/p>\n\n\n\n

At the Goldman Sachs Global Retailing Conference held in New York in early fall, a Signet Jewelers executive noted, \u201cwe are (currently) seeing a challenged consumer at the low end, particularly at price points under $500\u2026(most notable with the) discretionary self-purchase customer.\u201d<\/p>\n\n\n\n

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Paul Zimnisky<\/figcaption><\/figure><\/div>\n\n\n\n

In August, Signet, which considers itself \u201cthe world\u2019s largest retailer of diamond jewellery,\u201d dropped sales guidance for the full fiscal-year ending January 2023 to $7.7 billion, a 6% cut from prior guidance \u2013 which forecasts a 2.3% year-over-year sales decline.<\/p>\n\n\n\n

In November, Brilliant Earth, the fast-growing online diamond retailer, also cut sales guidance for calendar 2022 due to \u201cmacro headwinds (that) are more difficult than earlier in the year.\u201d The company is still guiding sales growth of 16% year-over-year, although the guidance is down from 20-30% growth earlier in the year.<\/p>\n\n\n\n

During a recent analyst call, the company\u2019s management said that while customers are still buying diamonds, they are \u201clengthening (their) decision-making process,\u201d which contrasts to behaviour a year ago.<\/p>\n\n\n\n

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Renovation of Tiffany & Co.\u2019s Manhattan flagship store is expected to finish by end-2022. Source: Paul Zimnisky<\/figcaption><\/figure><\/div>\n\n\n\n

That said, given record performance in 2021, even a low-single digit sales decline for the industry in 2022 could be viewed as a relatively good performance \u2013 and it is certainly possible that diamonds and jewellery as a category outperform other consumer products, especially at the high end.<\/p>\n\n\n\n

Notably, both LVMH and Richemont, the world\u2019s top-two luxury conglomerates, and parents of Tiffany & Co. and Cartier, respectively, have seen very strong year-to-date performance.<\/p>\n\n\n\n

In LVMH\u2019s most recently concluded quarter ended-September, \u201cwatches and jewellery\u201d sales grew 16%, which rounded out a record first nine-months of the year for the company. Sales at Richemont\u2019s \u201cJewellery Maisons\u201d grew 29% in the comparable quarter \u2013 thanks in part to a return in tourist spending in markets like Europe and Japan.<\/p>\n\n\n\n

In recent weeks, LVMH\u2019s CFO Jean Jacques Guiony optimistically noted, \u201cluxury is not a proxy for the general economy\u2026we don\u2019t necessarily sell to the average households, we sell to affluent people\u2026(and) our client base reacts to different stimulus, (not necessarily) GDP changes.\u201d<\/p>\n\n\n\n

Guiony described the current economic condition as a \u201cpre-announced recession,\u201d adding that \u201cwhen things are announced in advance they usually don\u2019t happen.\u201d Guiony added, \u201cI am not saying there won\u2019t be a recession\u2026(but) everybody is talking about the recession, but no one has seen it yet.\u201d<\/p>\n\n\n\n

Central banks around the world are walking a fine line attempting to slow economies in order to stymie inflation without causing a severe recession following record economic stimulus and supply-chain disruption during the pandemic years.<\/p>\n\n\n\n

Notably, in mid-November, inflation data in the U.S. signalled that the rapid pace of inflation this year may have peaked. Following the data, U.S. stocks rallied almost 10% in just two days, marking the strongest two consecutive days for the market since 2008.<\/p>\n\n\n\n

The Fed Funds futures market, a predictor of U.S. Central Bank policy, is currently forecasting that the current monetary tightening cycle will peak within the next five months, followed by a reversion to easing by year-end 2023 \u2013 which could be a catalyst for renewed economic growth.<\/p>\n\n\n\n

\n\n\n\n

Paul Zimnisky, CFA is a leading 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 <\/em>State of the Diamond Market<\/em><\/a>, a leading monthly industry report; an index of previous editions can be found <\/em>here<\/em><\/a>. Also, listen to the <\/em>Paul Zimnisky Diamond Analytics Podcast<\/em><\/a> 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 <\/em>paul@paulzimnisky.com<\/em><\/a> and followed on Twitter <\/em>@paulzimnisky<\/em><\/a>.<\/em><\/em><\/a><\/p>\n\n\n\n

Disclosure: At the time of writing, Paul Zimnisky held a long equity position in Lucara Diamond Corp, Star Diamond Corp, North Arrow Minerals Inc, Brilliant Earth Group and Barrick Gold Corp. Paul is an independent board member of Lipari Diamond Mines, a privately-held Canadian company with an operating kimberlite mine in Brazil and a development-stage asset in Angola. Please read full disclosure at <\/em>www.paulzimnisky.com<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A couple of weeks into the all-important Holiday Season, diamond analyst Paul Zimnisky examines diamond demand going into the year-end. Global inflation, which has reached multi-decade highs this year, as well as expectations for a potentially severe economic slowdown, is impacting the discretionary spending of diamond consumers. At the Goldman Sachs Global Retailing Conference held…<\/p>\n","protected":false},"author":7,"featured_media":18171,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[107,79],"tags":[],"thb-sponsors":[],"class_list":["post-18170","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retail","category-viewpoint"],"acf":[],"yoast_head":"\nDespite Dour Sentiment, Diamond Demand Could Surprise As 2022 Draws To A Close - Solitaire magazine is a International jewellery magazine - India\u2019s leading B2B gem and jewellery magazine<\/title>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/gjepc.org\/solitaire\/despite-dour-sentiment-diamond-demand-could-surprise-as-2022-draws-to-a-close\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Despite Dour Sentiment, Diamond Demand Could Surprise As 2022 Draws To A Close - Solitaire magazine is a International jewellery magazine - India\u2019s leading B2B gem and jewellery magazine\" \/>\n<meta property=\"og:description\" content=\"A couple of weeks into the all-important Holiday Season, diamond analyst Paul Zimnisky examines diamond demand going into the year-end. 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