San Francisco – Brilliant Earth reported positive second-quarter results on Wednesday night, with another record number of orders.
“During the quarter, we delivered our best Mother’s Day gift erformance in our history, while continuing to grow our market share and expand our showroom footprint,” CEO Beth Gerstein said in a statement.
The retailer plans to have a total of 35 showrooms by the end of this fiscal year.Here are five key takeaways from Brilliant Earth’s second quarter results.
Brilliant Earth took in more orders in Q2, but the average value of each sale was lower.
Net sales in the second quarter, which ended 30 June, increased 1 percent year over year to $110.2 million.
For the first half of the year, net sales totalled $207.9 million, down slightly from $208.8 million in the prior year.
Net income in the second quarter was $1.2 million compared to $3.8 million in the previous second quarter.
Gross profit was $63.5 million, representing a gross profit margin of 58 percent, compared to $57.8 million, representing a gross profit margin of 53 percent, in the same period last year.
Total orders increased by 21 percent in the quarter, while average order value (AOV) decreased by 16 percent. For the first half of the year, total orders increased by 16 percent while AOV decreased by 14 percent.
The company has noted in previous quarters that sales of non-bridal fine jewellery are increasing, but the category has a lower average price point, which drives down AOV.
“We delivered a strong second quarter, highlighted by: increased revenue with sustained growth on a four-year CAGR basis; expansion in gross margin and an adjusted EBITDA that exceeded our expectations, reflecting the increasing resonance of our premium brand, the agility with which we execute and the advantages of our asset light, data-driven operating model,” said Gerstein.
In bridal, under $10,000 was a key price point.
Brilliant Earth is faced with tough comps in fiscal 2023, competing with last year’s “year of the wedding” results.
“We entered the year anticipating a degree of normalization in weddings, and we’ve continued to see that play out,” Gerstein said on the company’s earnings call Wednesday evening.
In the second quarter, the brand saw growth in the under-$10,000 price range, noting its growing brand recognition with the millennial and Gen Z audiences.
As the summer wedding season kicked off, it posted double-digit growth in men’s wedding bands, which it touted as a testament to its brand resonances across genders.
“With respect to bridal trends, we are anticipating a return to a more normalization of industry growth rates towards the end of the year,” Chief Financial Officer Jeff Kuo said on the call.
“We are consistently gaining share in the industry, and this is reflected in the strong brand lines that we have, the strong order growth rates that we have. And so that normalization, the continued strength of the brand and traction with millennial and Gen Z customers are embedded in our guidance. We are very well positioned for long-term growth and long-term share gains as we’re still early in the journey of a very large $300 billion industry.”
The retailer has turned to social media influencers to promote its bridal range, enlisting Bachelor franchise stars Dean Unglert and Caelynn Miller-Keyes and Big Brother cast member Corey Brooks.
In terms of bridal offerings, the company’s most recent addition to its bridal assortment was a collaboration with Tacori, which introduced the ‘Lunetta Crescent’ bridal jewellery collection in July.
In May, the retailer unveiled its ‘Mosaics’ collection, which mixes and matches fancy diamond shapes for both fashion and bridal jewellery. The 18-piece collection features both natural and lab-grown diamonds.
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Sales of non-bridal fine jewellery are strong.
Although best known for its bridal offerings, Brilliant Earth has been expanding its range of jewellery beyond engagement rings and wedding bands.
It’s expanded into cocktail rings and men’s jewellery, and has collaborated with popular designers for new collections, including Jade Trau.
Most recently, Brilliant Earth partnered with L.A.-based designer Logan Hollowell Fine Jewellry on “Secret Garden,” a new floral-inspired capsule collection featuring all lab-grown gemstones.
“We are seizing the opportunity to attract new and returning customers with a thoughtful balance of classic and on-trend jewellery,” said Gerstein.
In the last financial year, one third of new customers bought non-bridal fine jewellery.Bestsellers include personalised jewellery such as name tag necklaces, reversible hoop earrings, wrap rings and accent necklaces.
The expansion of its store network continues.
Although it started as an online-only business, Brilliant Earth has been expanding its bricks-and-mortar presence in recent years.
Most recently, Brilliant Earth opened two new showrooms in Fairfax, Virginia’s Mosaic District in May and in Chicago’s Fulton Market in June.
The company also announced plans for two additional openings in Walnut Creek, California and the Coconut Grove area of Miami, bringing the total number of stores in the United States to 34.
The company plans to have 35 showrooms by the end of the financial year.”We continue to test, learn and refine our showroom experience and will soon open our first indoor mall-based showroom in King of Prussia, Pennsylvania, the first of three indoor mall-based showrooms that will open soon,” said Gerstein.
Although Gerstein admitted that an indoor mall location was somewhat out of character for the retailer, which typically opens standalone stores, Gerstein said she’d seen some compelling data.
“We think this is going to give us a chance to launch in some of the best malls in the country and help us see some of the other benefits in terms of driving awareness, while still seeing very compelling economics and still providing a really premium customer experience,” she said.
Brilliant Earth is positive about the second half of the financial year.
For fiscal 2023, Brilliant Earth reiterated its previous guidance of $460 million to $490 million in revenue, up from $439.9 million last year.
Adjusted EBITDA was raised to between $22 million and $35 million from the previous guidance of between $17 million and $32 million, increasing the profitability outlook.
The adjustment reflects “a balanced approach of continued prudent investments to gain market share while managing the business for profitability,” said Kuo.
Gerstein looked to the fiscal year ahead with optimism.
“We enter the second half of the year with positive momentum for our brand, strong demand for our distinct and curated bridal and fine jewelry, and continued confidence in our full-year growth goals,” she said in a statement.
