Holiday blues hit jewelry sales

By Lisa Baertlein

LOS ANGELES (Reuters) - Sellers of bling caught the blues this past Christmas.

Jewelry sellers in North America and Europe on Thursday said sales plunged during key months of the 2008 holiday shopping season, hurt by the worst economic downturn since the Great Depression and bad winter weather in the United States before Christmas.

Many retailers struggled through their worse holiday shopping season in about four decades and jewelers, who traditionally book about one-third of their annual sales in the last months of the year, were not immune.

JMP Securities analyst Kristine Koerber, who covers upscale jewelry seller Tiffany & Co and online retailer Blue Nile Inc, said the declines were unprecedented.

"Who knows how long it's going to go on ...? If the '09 holiday is worse than '08 holiday we have some big problems," said Koerber. But she gave credit to jewelry retailers for cutting costs to compensate for consumers' new frugality.

Signet Jewelers Ltd, the world's biggest specialty jeweler, reported a 15.2 percent plunge in underlying sales for the 9 weeks ended January 3, including a 10.9 percent fall in the United Kingdom and a 16.4 percent decline in its main U.S. market.

The group, whose stores include mid-tier retailers like H. Samuel and Ernest Jones in the United Kingdom and as Kay Jewelers and Jared the Galleria of Jewelry in the United States, also said it would stop paying dividends.

Rival Zale Corp said sales at established stores fell 19.6 percent in November and December from a year ago.