Sector Snap: Jewelry Retailers Decline

Consumers are cutting back on big-ticket items such as jewelry as they face rising food and gas costs and weak credit and housing markets. In addition, precious metal prices have increased sharply in recent months.

Merrill Lynch analyst Lorraine Maikis cut her ratings for Tiffany & Co. and Blue Nile to "Sell" from "Neutral."

It was the second downgrade in a week for Tiffany, which on Monday reported strong fourth-quarter results and raised 2008 earnings guidance.

On Tuesday, however, Oppenheimer analyst Roxanne Meyer said the increase in guidance was largely due to an accounting change and downgraded the company to "Perform" from "Outperform."

"We think quarter-to-date U.S. comp trends could easily turn south, and are concerned that a second-half rebound in the U.S. luxury market will be tough in light of turmoil in financial markets and workforce reduction," Meyer wrote.

Shares fell across the sector.

Tiffany & Co. shares fell $1.55, or 3.6 percent, to $41.60. The stock has traded between $32.84 and $57.34 over the past 52 weeks. Blue Nile shares fell $1.54, or 2.8 percent, to $54.05. The stock has traded between $38.35 and $106.16 over the past year.

Elsewhere in the sector, Zale Corp. shares fell 37 cents to $21.14. Signet Group PLC shares fell 34 cents, or 2.7 percent, to $12.28.