Damas delays plan for new stores amid slowdown

SHOP PLANS: Damas has shelved plans for six new shops in the UAE but its CEO says closures are unlikely. (Getty Images)

Regional jewellery giant Damas has shelved six store openings in the UAE in response to lower demand, but says reports of a collapse in jewellery sales are overblown.

“I think sales are down by 10-12 percent this year,” said Damas chief executive Tawhid Abdullah.

“Usually, when the price of gold goes up it takes a while before people start buying aggressively. But the confidence is still there. I mean there is more confidence to buy gold at $900 than there is at $800.”

Sales appear to be stabilising at the current level, he added.

The price of gold reached $1,000 per ounce this month for the first time in almost a year as investors turned to a traditional safe haven in volatile times.

Combined with the international recession battering tourists, this has led to some jewellers reporting a sharp drop in sales.

Abdullah said he does not think his company will have to close any stores this year as a result of a weaker market.

Damas recently opened nine new stores in The Dubai Mall, but has cancelled around six store openings in the UAE in response to lower demand. Those stores have mainly been where the company planned to open more than one branch, in malls that have yet to open.

“The market is not that bad. I am talking on behalf of myself, I don’t know about others, but we don’t see people closing down,” he said.

“We have seen that part of the drop is due to the less spending of some of the high end clients coupled with fewer tourists. But we had a great Valentine’s Day and Shopping Festival this year.”

One jeweller in Dubai’s gold souk said that his sales had fallen by 50 percent this year, compared with the corresponding period last year.

“December was still good, but sales in January were down a lot,” he said. “The number of tourists is unchanged, but their buying power is down.”

In Abu Dhabi, the volume of gold jewellery sales fell by 70 percent in January, according to the Abu Dhabi Gold and Jewellery Group, a trade body.

“Sales are poor, down to 70 percent in volume in January. It is the lowest sales since early 2008,” chairman Tushar Patni told newswire Reuters.

“The prices are high, there are no festivals or occasions and the liquidity crisis...these are the main reasons for such bad sales.”

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