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When Costco opened its first Australian store in 2009, few people would have believed that the US-style, large-format supermarket chain would offer diamonds and jewellery among the meat and vegetables aisles, let alone that they would become a major product range.
However, a decade on, the 13-store chain has reported and increase in Australian revenue from $2.59 billion in 2020 to $2.82 billion in 2021, while its profit more than doubled from $22.22 million in 2020 to $46.39 million this year.
The results are recorded to 31 August each year.
Patrick Noone managing director Costco Australia told The Australian that the company had performed strongly throughout the COVID-19 pandemic and the resulting travel restrictions, and that Costco’s jewellery category was increasing sales in the face of the company not being considered as a ‘typical’ shopping choice for a diamond engagement rings.
“Jewellery has done exceptionally well for us this year, I think people are at home and getting married, having babies and a lot of diamonds have been selling,” Noone said in The Australian article titled, Diamonds are Costco’s best friend as sales in Australia race to $3bn.
“Diamonds did well, we sell gold, and that surprised us a bit as well in terms of selling well, I think it is mainly we are getting traction with the quality of the goods, we are seeing $10,000 diamond rings being sold for weddings, $15,000 earrings and things like that and when people compare the quality out there in the market place and the savings it has proven popular,” Noone said.
The trend is not restricted to Australia. Strong jewellery sales helped boost Costco’s internationbal Q4 e-commerce revenue by almost nine per cent, according to Richard Galanti, chief financial officer.
On 9 December, during an Earnings Call – a conference call between the management of a public company, analysts, investors, and the media to discuss the company’s financial results during a given reporting period – Galanti told participants that jewellery was among Costco’s strongest departments with a 20 per cent jump in total revenue to $US1.67 billion for the quarter.
The Motley Fool finance website reported that Galanti said: “We actually sold a couple of rings in the $100,000 range.”
“In terms of e-commerce sales in the quarter, ex FX [foreign exchange] increased 13.3 per cent year-over-year, and that’s, of course, on top of an 86 per cent plus increase a year ago in the first quarter. Stronger department in terms of year of percentages include jewellery, tyres, and home furnishings.”
During a March 2020 Earnings Call, Galanti said, “We recently sold another high-value large carat diamond for a little over $US600,000″, while in May 2019 he claimed a customer had purchased a $US400,000 diamond ring from the supermarket.
Costco is reported to be North America’s fourth-largest retailer of fine jewellery and watches after Signet, Walmart and Tiffany, however; the company’s jewellery and watch departments have not been without controversy and legal action.
In 2010 Swiss watch brand Omega began, what was to become a long legal battle to stop Costco stocking and selling its watches at massive discounts – reportedly up to a third less than US retail.
While that case was proceeding – it eventually took five years – Tiffany & Co., the iconic US jewellery brand, began legal proceedings to stop Costco from selling, what it described, as counterfeit diamond engagement rings bearing the luxury retailer’s name.
The case lasted eight years.
COSTCO’S jewellery industry LEGAL battles: 2010 – 2021
| 2010 | MAY |
Massive Swiss watch discounts revealed |
| 2013 | FEB |
Tiffany & Co sues supermarket chain Tiffany & Co sues in a bid to stop the largest US warehouse club chain from selling what it described as counterfeit diamond engagement rings bearing the luxury retailer’s name. |
| MAR |
Leaked email could affect Tiffany case The email was reportedly sent to all Costco employees from CEO Craig Jelinek, saying he was disappointed that an amicable settlement hadn’t been reached. Instead, the dispute is being played-out as legal suit and countersuit before the courts. |
|
| APR |
Tiffany vs Costco: Round 3 It alleged that Costco used the mark “Tiffany” alone to describe two multi-thousand dollar engagement rings, the styles of which replicated a ring with a real “Tiffany® setting”. |
|
| 2014 | JAN |
Tiffany and Costco battle continues Tiffany & Co’s attempts to dismiss the Costco counterclaim that “tiffany setting” is a generic term is thrown out by a US Federal Court. |
| 2015 |
JAN
|
Costco wins approval to sell discounted Swiss watches The decision is the latest in a long-held court battle between Costco and Omega, a subsidiary of the Swatch Group. |
| NOV |
Tiffany & Co claims win in Costco trademark battle |
|
| 2016 | OCT |
Tiffany & Co receives millions in Costco dispute Costco is ordered to pay the jewellery company US$13.75 million (AU$18.1m) after it was found to have been illegally using the term “Tiffany” to sell engagement rings. |
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2017 |
AUG |
Tiffany & Co’s lengthy Costco dispute reaches finish line US district judge Laura Taylor Swain’s ruling states that the court “holds Costco liable for trademark infringement and trademark counterfeiting with respect to engagement rings sold under certain signage that referenced the mark ‘Tiffany’ as a standalone term”. |
| 2020 |
AUG
|
US court overturns judgment in Tiffany & Co. counterfeit case The dispute – which has proceeded through US courts for more than seven years – centres on a collection of six-prong diamond engagement rings sold by Costco with the descriptor “Tiffany” on the tags and in-store signage. |
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