In late October 2109, rumors that LVMH Moët Hennessy Louis Vuitton was going to buy Tiffany & Company (TIF)—a deal confirmed on Nov. 25 for $16.2 billion, a record in the luxury goods sector—sent the venerable American jeweler's stock soaring, and threw a spotlight on jewelry stocks in general. They've had a rough decade: Following the 2008 financial crisis, the jewelry industry has suffered in an environment of stagnant wages, rocky real estate (the decline in shopping malls) and economic uncertainty, chronically underperforming the stock market. However, of late the sector has regained some sparkle: Total returns for jewelry retail stocks are up 49.51% year-to-date, and 24.78% in the last 12 months, according to Zacks Investment Research.
A number of jewelry companies are exploring brick and mortar stores in higher-end neighborhoods, combined with outlets placed only in the highest quality, rather than foot-traffic-quantity, shopping centers. A shift to increased e-commerce is also ongoing, though jewelry tends to be the sort of merchandise people like to get up close and personal with before deciding to buy.
If you want to go jewelry shopping, here are some key companies to consider. All information is current as of Dec. 5, 2019.
- The jewelry sector is beginning to sparkle again: Total returns for jewelry retail stocks are up 49.51% in late 2019.
- Key firms for investors to consider include Signet Jewelers, Pandora, the Swatch Group, and Etsy.
Signet Jewelers Ltd.
Signet Jewelers (SIG) retails watches, watch components and diamond jewelry in the United States, Canada, and the United Kingdom. It operates through various well-known brand names, including Kay Jewelers, Zales, and Jared.
Signet has a price-to-book (P/B ratio) of 3.5, slightly higher than the industry average of 3.1. Its market cap is $953.80 million. Although its stores tend to operate in the aforementioned declining malls, Signet posted a smaller-than-expected loss of $43.7 million for its fiscal third quarter and sales of $1.187 billion that topped estimates (by 2%). Revenues for 2015 increased to $6.5 million from 2014's $5.7 million. As of July 2016, Signet’s stock price is down 47% year-to-date (YTD); however, the stock’s five-year average annualized return is 15.7%, more than three times greater than the luxury goods category average 4.8%. Also in Signet’s favor is a steadily increasing dividend yield over the past five years: It's currently paying $1.48 per share, a 9.22% yield.
Pandora A/S (PNDZF), founded in 1982, is an increasingly popular Danish jewelry company that designs, manufactures and markets jewelry around the world. Goods made of gold, silver, leather, and precious stones are produced and sold through concept stores, shops-within-shops and online. In all, the company operates through nearly 10,000 points of sale and has a market cap of $3.9 billion.
Pandora has a P/B ratio of 6.2. Its stock has been quite volatile this year, but, at $39 per share, is currently about where it was at the beginning of 2019. The company has a strategic partnership with the Walt Disney Company ( DIS) to provide Disney merchandise and also with Warner Bros. Consumer Products, for whom it's just produced a collection of Harry Potter charms. An increasing dividend yield, from 2.25% in 2015 to 6.93% in 2019, is another plus for Pandora investors.
The Swatch Group AG
The Swatch Group AG (SWGAY), owner of 17 actively sold brands, designs and markets jewelry, especially finished watches and watch components, throughout the world. It has a market cap of $13.9 billion.
The company’s P/B ratio is 1.28. However, steadily increasing dividend yield figures, from 0.25% in 2011 to 2.9% in 2019, provide some consolation for investors, and the stock price has traded in the same $14.80 to $13.75 range all year. Among the positive factors for the stock long term are double-digit sales growth in Asia and the company's key 2013 acquisition of prestigious jewelry brand Harry Winston.
The business model of Etsy Inc. (ETSY) has been immensely successful since the company's founding in 2005. With a market cap of $4.9 billion, Etsy provides a peer-to-peer (P2P) online marketplace for the sale of handcrafted and vintage items. It may seem like an unconventional play, but jewelry is the number one product category for Etsy sales: seven of the 10 most successful shops on Etsy in 2019 are jewelry sellers. Etsy has risen rapidly in the marketplace due to providing an extremely large variety of items and because most items sold on Etsy are relatively inexpensive.
After hitting a historical high of $72.77 in February, Etsy shares have retreated to $41.65, making them down YTD. Even so, the stock has nearly doubled in price since the company went public in 2015.
Etsy's P/B ratio is 12.67. A good indication of Etsy’s strong marketplace momentum and continuing promise for investors is shown by 2018 revenues of $603 million, nearly a 500% increase from 2013's $125 million.