JEWELLERY EDITORIAL

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2015/09/02

In the US there’s a turnaround of sorts where mid-market jewels have shown strong improvement while the luxury end of the jewellery scale had a disappointing run. 

 

 

The second quarter earnings reports from Signet Jewelers, the largest retail jeweller in the US, and Tiffany & Co., the largest luxury retail jeweller in the US, are a snapshot that the strong dollar and to a lesser extent the volatility of the China economy are having an effect on people’s spending. It’s also showing that the US economy, even amid signs that the recovery is slowing, remains resilient.

 

And it shows the dominate position Signet has on the US jewellery market.

 

Signet reported that second quarter sales in its US and UK stores increased 15.1 percent year-over-year to

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.41 billion. Same store sales increased 4.2 percent for the same period. Note that the UK stores reported a decline of 2.3 percent due to the strong US dollar. The UK operation accounts for about 11 percent of total Signet sales. So this strength in sales is by far the result of its US stores. The company’s eCommerce sales rose 30.5 percent to $65.9 million. Profit increased 7.2 percent to $62.2 million.

 

The Bermuda-based company owns more than 3,000 retail locations in the US and Canada. Second quarter sales in North America are as follows:

 

* Sterling Jewelers division (which includes Kay Jewelers and Jared) reported that total sales increased 5.9 to $858.5 million. Same store sales increased 3.3 percent. Signet said sales increases “were broad-based across store banners, product brands and non-brands, as well as multi-channels. Bridal and diamond jewellery was particularly strong.”

 

* Zale Division (which includes the recently acquired Zale Corp. brands: Zale, Piercing Pagoda stores in the US and Canada) saw its sales increase by 57.3 percent to 389.3 million. Same-store sales rose 5.8 percent for the period.

 

Meanwhile, Tiffany & Co. was hurt by the strong dollar, even in the US as fewer tourists were buying luxury jewellery from its US locations. Second quarter sales declined 2 percent year-over-year to $475 million. Higher sales to U.S. customers contrasted with lower foreign tourist spending in the U.S. So, if it wasn’t for spending by US consumers, things would have been more difficult for the luxury jeweller.

 

“We entered this year expecting translation and tourism-related pressures on sales and earnings from the exceptionally strong U.S. dollar, as well as challenging economic conditions in certain markets,”

said Frederic Cumenal, Tiffany CEO.

“The adverse effects from the strong dollar have been even more significant than initially expected.”

 

 

 


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2015/09/02

 

 

De Beers lowered the price of rough by around 10%.  While this does add a slightly better chance of profitability for cutters, how will it affect jewellery at the retail level? 

DeBeers likes to believe that it is the driving force in the diamond industry.  For nearly 100 years they have manipulated diamond prices and supply to create a demand based on false rarity.  Over the last decade or two, their control has weakened and recent events at their monthly sights are showing signs that their grip may be crumbling even farther.

The true drivers of the diamond business are the consumers.  They are the ones that provide the profits that keep the entire industry going.  They are the ones that will decide the fate of the industry.  We must listen to them.

Consumers are already speaking to us.  They are losing interest in diamonds.  They no longer believe in the investment value of diamonds and diamond jewellery.  They still like the sparkle but are not interested in paying the traditionally high prices.  As a result, retail diamond prices are falling and the volume of sales is growing smaller.

The drop in retail diamond price coupled with lower gold price will, in the long run, be a good thing.  If jewellery is affordable more people can be in a position to buy and we will see a recovery in jewellery sales volume. 

The problem is that retail jewellers are sitting on older inventory purchased at higher prices.  Lower retail prices cut deeper into margins that are already too slim.  Cutters and wholesalers face the same issue.  They have been absorbing increases in rough prices in order to move goods, often losing money.

The recent reduction in the price of rough may help manufacturers make a small profit or at least break even, but the reduction is not enough to translate to lower wholesale prices.  It will require a significant lowering of rough prices to make any real difference.

Retailers have an advantage over most cutters and diamond manufacturers; they can turn to other product lines to maintain profitability.  Coloured stones are increasing in popularity and the margins are quite strong.  While retail diamond margins languish in double digits or even single digits, colour can produce keystone, triple keystone or higher profits.  Diamonds will still be used as accents, but colour will take the starring role.

Eventually diamonds will find their natural price level.  DeBeers will need to be sensitive to retail demands and adjust their prices accordingly.  It won’t be surprise if they make a few more attempts to fall back on their old manipulation techniques but if they truly want diamonds to be a commodity it is inevitable that prices must follow consumer demand.

There will always a demand for jewellery.  It has been that way for thousands of years and that will not change.  It will take time for the current problems to work themselves out and the industry will finally stabilize at price points that will produce profits and customer satisfaction.  But it will still be stressful for a while.

 

 

 

 


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2015/09/01

The recent global economic turmoil has affected performances of many countries including India where analysts and leaders of different industries are assessing the prospective impacts of yuan devaluation and rupee depreciation.

 

India is not badly affected by currency devaluation

India is not badly affected by currency devaluation

 

India stands to benefit from China's slowdown thanks to its resilient consumer spending and improving macroeconomic fundamentals. The foreign media is taking note of the growth potential of India’s economy acknowledging its strengths against the backdrop of a slowing China and a sluggish global economy.

 

A report published recently in the Wall Street Journal says, "India has not been as badly shaken as Brazil, Russia or South Africa as it has got ample international reserves and it is not greatly dependent on foreign capital to fund its imports. Besides, the country does not rely on exporting resources which means receding Chinese demand for minerals and metals is not serious. India does not even have many companies competing in the third markets against Chinese exporters which benefit from a weaker yuan.”

 

But among these conditions, the gold prices continued to edge higher because of the increased demand from jewellers and falling rupee amid worries over China's slowing economic growth. The yellow metal prices reached to INR 27,575 per 10 gm during the last week of August, 2015. The increase in demand of gold from jewellers ahead of the wedding and festive seasons has helped the prices to move up. The recent crash in domestic stocks markets is largely responsible for the sharp rally, industry leaders feel here.

 

Chairman & Managing Director of P. N. Gadgil Jewellers Pvt. Ltd. and Vice President of the India Bullion & Jewellers’ Association (IBJA) Mr. Saurabh Gadgil says, “Gold is considered as a safe investment bet even during the volatile times as it is usually long term in nature. During the recent fall in the prices of gold, consumers’ demand for gold bars and coins was heavy. We also received substantial amounts of pre orders for customized wedding jewellery.”

 

Speaking about the domestic jewellery demand, Mr. Gadgil says, “With the gold witnessing sharp fall and rise due to recent global market sentiments and economic movements, consumers and investors are little bearish at the moment. But the situation is likely to be under control with the gold prices stabilizing by Diwali. Festivals in India are considered to be sacred times to invest in or buy jewellery. Jewellery sales do escalate during festivals like Ganesh Chaturthi, Diwali, Christmas and wedding season where consumers are likely to make purchases irrespective of the volatility in the prices of gold and other precious metals. This is largely attributed towards consumer sentiments and emotions attached with such occasions. Considering the fluctuations in the prices of precious metals we are expecting a rise of 20% to 30% in our sales by the end of this year.”

 

But on export front, the leaders hold different opinions about the prospective impact of INR depreciation or yuan devaluation. Mr. Vipul Shah, Chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC) says, "I think the rupee downfall will not have negative impact on the gems and jewellery exporters. Even though the prices of raw materials will rise but as our inputs are mostly from imports, it will be offset by higher export realization.”

 

Mr. Gadgil says, “There will be substantial impact on India’s jewellery exports considering the devaluation of yuan and weakening of Indian rupee. However, the situation is temporary. With the intervention of Reserve Bank of India to curb the situation and the beginning of festivities and wedding season, jewellery industry is likely to see a positive growth in the second half of the current fiscal.”

 

A monthly newsletter of the Department of Industrial Policy and Promotion (DIPP) says that the devaluation of yuan is expected to affect the domestic industry as it would make the Indian exports costly in the global market. The impact of devaluation of the Chinese currency on Indian industry is expected to be threefold.”

 

But as mentioned in report of the Wall Street Journal, India highlighted the strength of country’s economy to withstand any turmoil in the Chinese and global economy. The governmental authorities have pointed to the healthy foreign exchange reserves, improving macroeconomic data and the continued interest of foreign companies to tap into India's demand. 

 

 

 


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2015/08/30

Many gemstones come steeped in the history of trade, conquest, and adventure, but few have a past like Colombian emeralds

 

Nuestra Señora de Atocha Colombian emerald-set gold jewel. Photo courtesy Sotheby’s.

Nuestra Señora de Atocha Colombian emerald-set gold jewel. Photo courtesy Sotheby’s.

 

Colombian emeralds are very much a gemstone of the present, though. Approximately two million carats, with a value of US$147 million, were exported last year. While most head to the US, explains Luis Gabriel Angarita, president of ACODES the Colombian association of emerald exporters, most Colombian emeralds end up in Asia where they are revered not only for their rich green color but for their rarity and value. 

 

Rough Muzo emerald crystals. Photo Ron Ringsrud.

Rough Muzo emerald crystals. Photo Ron Ringsrud.

 

In the past, many difficulties have beset the Colombian emerald market. Low-paid miners often worked emerald areas illegally. Miners often lost their lives in poorly ventilated and constructed tunnels. Lastly, the value and rarity of emeralds entangled them in bloody drug wars. The end result was lost lives, poor living conditions, environmental destruction, lost revenue, unpredictable supply, and erratic pricing.

However, in the last few years, conditions have been changing. The Colombian government has begun certifying and regulating all types of mining, says Ron Ringsrud, Director of Operations and Sales for Muzo International. In addition, companies like Muzo International, have begun offering miners regular salaries at above average wages and safer working conditions. The result is reduced illegal mining, improved living conditions, better environmental safeguards, stable supply, and regular pricing. “It’s an improvement overall,” says Ringsrud.

 

Town of Muzo in the mountains of Colombia. Photo Ron Ringsrud.

Town of Muzo in the mountains of Colombia. Photo Ron Ringsrud.

 

Miners, Muzo Mine, Colombia. Photo Ron Ringsrud

Miners, Muzo Mine, Colombia. Photo Ron Ringsrud

 

Industry organizations, too, are playing an important part in the changes. ACODES helps members understand and deal with government regulations regarding emerald exports, and subsidizes members’ participation in international gem shows in order to promote emeralds, and develop the market for Colombian stones. Another step in standardization was the establishment of Colombian Emerald Technological Development Center or CDTEC, a gemological laboratory with up-to-date equipment. Supported by the Colombian government and the national emerald federation, FEDESMERALDAS, the lab verifies the identity of stones and issues certificates.

 

Round brilliant 3.08 ct. Colombian emerald. Photo Mia Dixon/www.palagems.com.

Round brilliant 3.08 ct. Colombian emerald. Photo Mia Dixon.

 

To further strengthen the Colombian emerald industry, ACODES, FEDESMERALDAS, and the National Mining Agency in association with the Colombian Ministry of Mines will host internationally recognized speakers from trade organizations, laboratories, and emerald-producing areas around the world at the First International Emerald Symposium in Bogotá, October 13 – 15, 2015. Their goal, says Angarita, is to “promote emeralds and help educate the consumer so they see the beauty of emeralds, and that they are a safe investment.”

 

Colombian emerald crystals from the Muzo Mine. Photo Ron Ringsrud.

Colombian emerald crystals from the Muzo Mine. Photo Ron Ringsrud.

 

Anyone attending gem shows recently knows that emerald prices are rising. While “nice consumer quality emeralds” average between $5000 and $15,000 a carat, says Ringsrud, prices can range from as low as $200 a carat to more than $70,000 per carat, says Zairon Rosero of Four C’s in Bogotá; untreated stones can command more than $100,000 a carat. “More and more people are aware of the incredible rarity of emeralds in general and of Colombian emerald specifically,” says Ringsrud. “They’re very limited. There is no stockpile of emerald like there is with diamonds.”

 

Emerald cut 1.28 ct. Colombian emerald. Photo Mia Dixon/www.palagems.com.

Emerald cut 1.28 ct. Colombian emerald. Photo Mia Dixon.

 

Square emerald cut 1.97 ct. Colombian emerald. Photo Mia Dixon/www.palagems.com.

Square emerald cut 1.97 ct. Colombian emerald. Photo Mia Dixon.

 

While Asia, the US and Europe provide strong markets for Colombian stones, gold and diamonds are more popular in Latin America and even in Colombia. It’s a gap Muzo International, at least, hopes to address. “It doesn’t make sense that ladies in South America shouldn’t enjoy wearing these emeralds,” says Ringsrud. What makes Colombian emeralds different from emeralds from other sources? “They have the spark of life. If you compare emeralds from around the world, you can see the difference. Colombian emeralds are much more beautiful,” says Angarita. “They’re the Rolls Royce of emeralds,” says Jose Rozo of Luxury Colombian Emerald Ltda CI.

 

 

 


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2015/08/26

The UK jewellery scene has been abuzz with news of a new fine jewellery launch from heritage British brand Boodles. The collection is called Pas de Duex, and as you might have already guessed, it is inspired by ballet.

Boodles has teamed up with The Royal Ballet to create a collection of diamond and platinum designs, with head of design Rebecca Hawkins, a keen ballet fan herself, working closely with the dance company’s associate director Jeanette Laurence.

 

“Speaking to Jeanetta helped me get a feel for ballet as a dance form, and helped me see everything that makes The Royal Ballet so special,”

says Hawkins, who would often trace the outlines of images of dancers to incorporate them into the designs.

“We discussed what sets ballet apart, the feeling of being on stage, and what makes the perfect dance partnership.”

 

During the design process she was given exclusive access to rehearsals, the costume department and The Royal Ballet archives. What emerged is the Pas de Duex collection, inspired by the dance duet and comprising more than 30 elegant platinum jewels, from studs to collars, set with kite-shaped diamonds, rock crystal, kunzite and Paraiba tourmaline.

 

Earrings from the Pas de Duex collection by Boodles

Earrings from the Pas de Duex collection by Boodles

 

Fellow London jeweller Kiki McDonough also recently released a gold and diamond collection inspired by ballet, which was designed in collaboration with dancer Lauren Cuthbertson. Like the Boodles collection, the Lauren collection is free from ballet slippers and ribbons. Instead it takes a wider approach to the design and centres on leaves, in reference to Cuthbert’s habit of battling stage fright by pretending to be a child kicking in the leaves, and also her performance in Alice in Wonderland.

 

A gold and diamond pendant from the Lauren collection by Kiki McDonough

A gold and diamond pendant from the Lauren collection by Kiki McDonough

 

This Lauren collection follows on from Aurora, another ballet-inspired collection, this time inspired by Sleeping Beauty, also created by Kiki McDonough, who is well known for her love of the ballet and support of dance charities.

Other jewellers inspired by ballet include ethical brand September Rose. Its gold Couru pendant is inspired by Rose Adagio from Sleeping Beauty and was first designed for founder Samantha Rose’s mother, who is a retired ballet dancer.

 

A Couru pendant in Fairtrade gold by September Rose

A Couru pendant in Fairtrade gold by September Rose

 

Cindy Chao last year teamed up with actress Sarah Jessica Parker to create a gold and titanium Ballerina Butterfly brooch set with brown and white diamonds, slices of brown rough diamonds and conch pearls to raise funds for the New York City Ballet through a sale at Sotheby’s in Hong Kong. It sold for US

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.2 million.

 

The Ballerina Butterfly brooch created by Cindy Chao and Sarah Jessica Parker

The Ballerina Butterfly brooch created by Cindy Chao and Sarah Jessica Parker

 

For some brands, just the association with ballet and its elegance and grace is enough, and it is a popular theme for marketing materials. Continental Jewellery has run a particularly successful advertising campaign for its wholesale jewellery collections that stars ballerinas in action.

There are many parallels between ballet and jewellery design – grace, elegance, precision, beauty, purity – and it is proving to be an alluring theme in jewellery design and promotion.

 

An image of a ballet dancer used by Continental Jewellery for its ad campaign

An image of a ballet dancer used by Continental Jewellery for its ad campaign

 

 


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