I was reminded of the old adage yesterday – turnover is vanity, profit is sanity. It’s so clichéd as to sound almost like bad advice, but of course anyone in business knows it holds as true today as it did when the first merchants started trying to glean a few pennies extra on a bushel of corn.
This is why the recent flurry of media attention surrounding the Company of Master Jewellers’ (CMJ) financial results set me to thinking: top-line growth is not the priority for the majority of independents. Profit is what they want. So I set to deconstructing what I have seen elsewhere in the trade press and asked the CMJ a few questions of my own.
For starters, I am confused by the adulation heaped on chief executive Willie Hamilton for advising jewellers not to neglect their core business of selling bridal jewellery in favour of the fashion brands. I’m not saying it is bad advice: the numbers suggest his members agreed with him and did indeed buy more stock. I’m simply saying there is something vaguely sycophantic about the in-house PRs trotting out press releases on how fantastic the results are only for the trade magazines to wax lyrical about how his mighty wisdom has paid off for the members, even though the CMJ does not have any data about how much sell-through they have achieved with all this extra bridal stock purchased. To any jeweller who followed the advice and is struggling to shift the extra stock, for whatever reason, the plaudits will seem at best premature.
Hamilton has without doubt done some admirable work since taking the helm at the CMJ – growth is a good thing and many of the members I speak to say they are very happy indeed with the preferential rates and other benefits they receive by being members. But his advice on bridal was hardly a pronouncement of such biblical gravitas as the other trade magazines would have you believe. He has not had a revelation nor has he parted the Red Sea. Jewellers have been in this game for a thousand years and saying to them ‘sell more bridal’ is like telling a florist to sell more flowers.
To credit Hamilton with the sales growth as though he is some precious metal prognosticator is a touch nauseating whether you’re a PR or in the trade press. It is also very insulting to the independent jewellers to suggest that it if it weren’t for the All Seeing Eye’s advice they would still be wallowing in post-recession blues. I heard we’ve also had an economic upturn this year – could that have had anything to do with it?
Another issue with such excitable prose issuing from the offices of CMJ is that in the absence of sell-through figures, the only thing they can be certain of is how well the suppliers are doing from the setup. Surely that is not the point of a buying group such as the CMJ? The idea, when I last checked, was for independents to get some bargaining power for lower prices by buying together in bulk. So Hamilton’s advice paid off… but for whom? The manufacturers? It is baffling that the CMJ is using its suppliers’ ringing tills rather than increased retailer profits as an example of why independent jewellers should want to join.
I can see why other trade magazines want to avoid drilling down into the detail: it is much more optimistic to take simplistic growth figures at face value and for everyone to feel good about it. And I certainly do not want Jewellery Focus to be the harbinger of doom. But we must be realistic: within days of the CMJ’s sensational news being sent out to journalists everywhere, the July hallmarking figures came in at about 10% lower than the same time last year. We should not perpetually pretend everything is going swimmingly, and certainly not by omitting the only data that really counts on the jeweller’s bottom line: sell-through and profit.
The CMJ could easily retort that if retailers are buying 35% more stock then it is reasonable to assume they are selling it or at least think they can sell it in the near future. But no business can survive on intuition alone: we need facts, figures, margins, especially if the CMJ wants to recruit more members specifically on the strength of its financial achievements. We can all join in and celebrate profit but let us not hang the flags out on a hunch.
Can you imagine HSBC filing financial results with the business desk at a national newspaper and the journalist being happy to swallow it whole, missing out information about irritating facts like EBITDA and debt burden? No, neither can I. So as a trade journalist, it is not my job to make people feel good. It is to ask questions and suggest where things might be done better. Hence I feel compelled to raise the point that the CMJ by its own admission does not have any data on sell-through, and ultimately it really should before telling the world what a fantastic job it and its commandant are doing.
So please dear reader, forgive this humble journalist for pouring cold water on such a good news story. But I am not here to copy and paste self-congratulating press releases from the great and good.