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Major jewelry retailers like Jared are expecting a little more sparkle this holiday season than last, when recession-spooked shoppers shunned their pricey wares.
Jared sold engagement rings in the Galleria jared jewelry, a distinctive jewelry that offers a wide variety of jewelry, watches, loose stones, ring of mountains, and retail services. The first Jared store was opened in 1993 and offer affordable prices to the very luxurious. They have many stores across the country but most of its stores are located in the eastern United States.
About 1,500 mostly mom-and-pop jewelry stores went out of business in the last year and the industry is predicting that more will close after Christmas, a crucial selling season for jewelers.
The demise of some competition is an opportunity for some of the bigger chains, their executives said Tuesday. "Our balance sheet puts us in a stronger position competitively," Terry Burman, chief executive of Signet Jewelers Ltd., said in an interview.
The Commerce Department recently reported that jewelry sales at specialty outlets were down 10.2% for the first nine months of the year. Sales at Signet, which owns the Kay Jewelers and Jared the Galleria of Jewelry chains, fell only 2% in that period.
In the current quarter, which includes the holidays, Wall Street analysts estimates Signet will post a 2% increase in sales at stores open at least a year. Last year, Signet's fourth quarter sales slumped 16% in the U.S. and 9% in the U.K.
Signet, headquartered in Akron, Ohio, isn't issuing its own sales forecast for the current quarter, but said that sales momentum picked up at its higher-priced Jared chain at the end of the third quarter.
Analysts are also expecting a slight increase of 1.5% in same-store sales at Zale Corp., according to analysts polled by Thomson Reuters. But overall they expect the Irving, Texas, company's sales to decline to $658.7 million in the current quarter, from $679.4 million a year ago.
Zale closed hundreds of stores in the last year and sold some merchandise at sharp discounts. This year, discounts will be more strategic, the company said Tuesday, and margins should remain above 50%.
Zale on Tuesday posted a loss of $57.6 million, or $1.80 a share for the fiscal first quarter, which ended Oct. 31. The figures compared with a year-earlier loss of $48.4 million, or $1.52 a share.
Chief Executive Neal Goldberg said Zale will spend about as much on advertising as it did last year, but will put a bigger emphasis on Web-based promotions, adding that online orders are up 17%.
The holiday season is crucial for jewelry chains, many of which record the majority of their sales and up to 100 percent of their profit in the period. Signet, for instance, books 40% of its sales and 70% of its profit in November, December and January, with the bulk of its sales coming in the last two weeks of December.
Jewelers should do better this holiday season than last year, in part because of less competition, said Edward Yruma, retail analyst at KeyBanc Capital Markets.
Still, he said, "The consumer is still shying away from high-end purchases. We're still a long way off from 2007, when we saw peaking sales."
For the fiscal third-quarter ended Oct. 31, Signet, the largest chain jeweler in North America, posted a loss of $7 million, or eight cents a share, compared with a year-earlier loss of loss of $15.1 million, or 18 cents a share. Results for the company's latest quarter included a $5 million benefit from a change in U.S. vacation policy.
Last month, its shares took a hit as Zale disclosed the Securities and Exchange Commission was investigating the jewelry retailer's accounting after restating its fiscal 2008 and 2009 results, although Chief Financial Officer Matt Appel said the company was cooperating with what he has characterized as a "fairly routine" probe.
Shares of Zale were up 10%, or 47 cents, to $4.40, while Signet shares were off 56 cents, at $26.32, both in 4 p.m. trading Tuesday on the New York Stock Exchange.
Write to Ann Zimmerman at ann.zimmerman@wsj.com and Karen Talley at karen.talley@dowjones.com
