Aug 29 - Affordable jewelry is attracting consumers- drawn to the perception of long lasting value and gift appeal. Bobbi Rebell reports.
Price points may change, but especially in a tough economy, diamonds are forever. And that's what is helping drive sales of affordable jewelry in the U.S. Signet Jewelers, parent of Kay Jewelers and Jared, said U.S. same-store sales were up in the second quarter, driven by strength in bridal and colored diamonds. Shoppers are also spending more per visit at Kay Jewelers and the Jared stores. A day earlier rival Zale said same-store sales were also up nicely. Whether it's an engagement ring or just a splurge, jewelry has a special appeal no matter what the budget, says Jennifer Davis of Lazard Capital: SOUNDBITE: JENNIFER DAVIS, ANALYST, LAZARD CAPITAL MARKETS (ENGLISH) SAYING: "You know apparel, you can basically- it loses it's value right after you buy it. A diamond ring, you know it's going to maintain its value, and you can sell it in the future for potentially more money. So I think people see more value in jewelry, so are more comfortable spending money on jewelry." Shares of both Zale and Signet have been shining stars recently- Zale up around 190 percent in the last year- Signet up more than 45 percent. Signet gave back some gains Thursday after the company lowered its current quarter outlook- and said its British business has been weak. But Davis is maintaining her Buy rating: SOUNDBITE: JENNIFER DAVIS, ANALYST, LAZARD CAPITAL MARKETS (ENGLISH) SAYING: "Like the stock a lot. It's selling off a little today on third quarter guidance and, you know, I think that is a little bit of a confusion around there. I think that they are poised to beat, and the more interesting aspect of it to me is 4th quarter is when they generate 50% of their earnings and I think that Signet is very well positioned for the 4th quarter with you know new merchandise " Davis also likes their online business. E-commerce sales were up 29 percent. She says mall-based stores like Kay and Zale appeal to consumers who want the security and customer service of a brick and mortar store even when they buy online.