Jewelry Stores Archives
Whitehall Reports Loss.
Sales at Whitehall Jewellers slid 7 percent to $58.9 million during the company's third quarter of fiscal year 2005. Whitehall's net loss grew from $8.3 million to $43 million for the quarter, which ended October 31, 2005.
Year-to-date Whitehall sales fell 5 percent from 2004 to $198.3 million. Net losses grew by nearly a multiple of five to $71.9 million.
On December 7, 2005, Whitehall received more than $2 million from the exercise of warrants resulting in the issuance of 2,792,462 Whitehall common shares to the Prentice and Holtzman investors.
Whitehall expects to close 77 stores before February 2006, which will liquidate approximately $44 million in inventory.
No Kidding? What A Revelation!
According to a survey conducted by Harris Interactive and sponsored by Kronos Inc. consumers are more likely to make purchases and inclined to buy more merchandise per transaction when retailers provide attentive, knowledgeable service.
Savvy retailers who focus on providing higher levels of customer service are able to influence shoppers to increasing their holiday spending, Recognizing that their workforce is critical to sales,leading retailers are utilizing their workforce as a strategic asset to satisfy customers and boost sales this holiday season.
The survey found that 85 percent of respondents were “somewhat to very likely” to purchase additional products if they interacted with a competent sales associate while shopping.
The survey also found that potential buyers will return merchandise to the shelf if they were unable to find the assistance they need, effectively reversing their decision to buy. An overwhelming 82 percent of consumers will wait on line no longer than15 minutes.
Additionally, 45 percent of those polled said that they shop for themselves during the holiday season, giving retailers another incentive to ensure that they are catering to the service needs of their customers.
"Because this survey gives retailers a glimpse into the consumer psyche during the holiday shopping season, they can work to ensure they are focused on the factors that most contribute to increased spending and customer loyalty," Stuart Itkin, vice president of marketing at Kronos, said in a company press release.
Stuart, you're a frickin genius. All that money spent on the MBA degree. Common sense costs a lot less.
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What Will Happen To Zales?
The Dallas Morning News reports that Zales, the largest United States jewelry chain's stock price has fallen more than 12 percent since Thanksgiving, as Wall Street expresses concerns about the Irving, TX-based company's shrinking market share.
The company has lowered sales and profit expectations in recent months and has admitted that it has lost market share to Kay Jewelers.
Since reaching its split-adjusted high of $34.50 in July, Zale stock has fallen more than 25 percent, closing December 27 at $25.28, down 47-cents.
After disappointing results for Christmas 2004, the company shuffled management at Zales Jewelers, which makes up 45 percent of Zale Corp.'s sales. But a year later, the chain is still stumbling.
In a shift in direction, Zales is getting away from its "price-driven strategy" and emphasizing "a more style and quality image," said David Sternblitz, Zale vice president and treasurer.
The chain is buying basic jewelry directly from overseas sources, bypassing traditional wholesalers in the United States. And it has hedged against rising gold prices in recent months, he said December 23.
Zales is advertising for the first time in The New York Times Sunday magazine and has ditched its longtime television commercials for image ads. It's also using more direct mail and fewer newspaper inserts, Mr. Sternbiltz said.
The many moving parts have put Wall Street on guard. In November, J.P. Morgan and Goldman Sachs downgraded the stock.
Analysts say major competitor Kay Jewelers and department stores such as J.C. Penney Co., and Federated Department Stores Inc., which operates Macy's and Bloomingdale's, are luring away Zales' traditional customers.
In a note issued last week, Goldman downgraded Zale stock because of "extensive internal merchandising and marketing repositionings during the critical holiday season, which accounts for 100 percent of earnings."
Penney's jewelry offerings were "more contemporary and fashion-forward," the report said. "Zales continues to bleed market share to Kay, as demonstrated by the annual same-store sales trends since 2003."
Kay Jewelers and off-mall chain Jared are both owned by London-based Signet Group and operated by its subsidiary, Sterling Jewelers Inc., based in Akron, Ohio.
"We've experienced an erosion in market share to our next largest competitor over the past three years, and that's why we're repositioning Zales," Sternblitz said.
"We have been visiting Zales stores across malls over the past few weeks in search of positive evidence that management has been executing its brand repositioning efforts well. We have come up empty," wrote Goldman Sachs analyst Adrianne Shapira.
The week before Christmas, Zales stores put up "Lowest Prices of the Season" banners in an attempt to meet sales targets.
Sternblitz said that the company estimates comparable store sales to increase 2 percent to 3 percent. It plans to announce combined November-December results on January 5, when chain stores are scheduled to report December sales.
In addition to its flagship Zales Jewelers division, Zale owns Gordon's Jewelers, Bailey Banks & Biddle Fine Jewelers and other chains.
Zale expects to report fiscal second-quarter earnings of $2.05 to $2.08 a share, excluding a one-time gain.
Changing Landscape in Retail Jewelry
Investment fund Newcastle Partners LP has filed a lawsuit against Whitehall Jewellers Inc., claiming the jewelry chain is trying to stymie Newcastle's takeover efforts.
In a lawsuit filed January 4, in the Southern District of New York, the Newcastle said Whitehall's directors and Prentice Capital Management LP have conspired to rig a proxy fight over a proposed change in the company's charter that would allow the board to issue more shares and transfer control of the company to Prentice.
In October, Whitehall announced it had reached an agreement with Prentice to restructure its debt and improve its financial condition. Under the agreement, it would receive a $30 million bridge loan and issue $50 million in secured convertible notes in exchange for giving Prentice control of 87 percent of its common stock.
Shareholders are set to vote on the changes in Whitehall's corporate charter on Jan. 19.
Newcastle, which said it's the second largest independent shareholder of Whitehall, has made several tender offers for the company since the financing package was announced. Its latest offer was $1.50 a share.
A Whitehall spokesman wasn't immediately available to comment late Thursday. Whitehall shares rose 1 cent, at $1.24 in morning trading Friday on the OTC Bulletin Board.
In its complaint, Newcastle alleges that Whitehall's directors would remain in place under Prentice's proposal and that they have implemented a variety of measures intended to stack the deck in favor of Prentice, including waiving "poison pill" protections for Prentice, but not Newcastle.
The lawsuit also claims that Prentice has contacted selected shareholders who own significant blocks of the company's stock and offered to purchase their shares at a substantial premium to the market price on the condition they cast their proxy vote in favor of Whitehall's management.
Earlier Thursday, Whitehall asked its shareholders to take no action on the Newcastle proposal. The company said the board would disclose its position on the revised offer at a later time after reviewing the offer's terms.
The company said that its board has previously determined that it cannot consider any proposal without a firm commitment for refinancing the company's outstanding debt and meeting its future financial needs. Newcastle has failed to demonstrate its ability to do so, the company said.
Zales To Get New CEO.
Mary L. Forte has resigned as president and chief executive officer of Zale Corp., effective immediately.
The company has appointed board member Betsy Burton as interim chief executive officer, pending the selection of a new chief executive officer. Burton has served on the Zale board since 2003.
Burton, 54, has held the position of chief executive officer of various companies, including Supercuts, Inc., PIP Printing and the Cosmetic Center. She has also provided interim management and consulting services in the retail industry. Burton also holds posts on several other public company boards including Staples, Aeropostale and Rent-A-Center.
Zale Corp. is North America's largest specialty jeweler with about 2,400 locations throughout the United States, Canada and Puerto Rico as well as online. The company's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Bailey Banks & Biddle Fine Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. The company also operates direct sales through www.zales.com and www.baileybanksandbiddle.com
In the all important 4th Quarter sales rose only by 0.9% despite re-doing it's product mix and going more upscale.
Pressure from Internet Diamond & Jewelry websites also cut into Zale sales.
Tiffany To Open Two New Diamond & Jewelry Stores In China.
Luxury retailer Tiffany & Co., plans to open two new stores in China during 2006. One store will open at Beijing's Oriental Plaza, and a second store at Shanghai's Plaza 66. Beijing is scheduled to open in May, and Shanghai could open towards the end of the year, the company reports.
"The Oriental Plaza in Beijing and Plaza 66 in Shanghai are ideal environments for a Tiffany store," said Darren Chen, group vice president at Tiffany & Co. "These convenient locations expand our presence both in Beijing and Shanghai, cities of growing importance as global business centers and as destinations for both domestic and overseas tourists."
Once the new stores open, Tiffany will have a total of two stores in each of those prominent cities. Tiffany currently has a boutique in Beijing's Peninsula Palace Hotel, which opened in 2001, and a boutique in the City Plaza shopping complex in Shanghai, which opened in 2004.
How do say "Bling-Bling" in Chinese?
"Bring-Bring"!
Diamond Identification Method for Consumers: Bring Napkins
The Financial Times of London reports on a novel way to identify Diamonds from fakes:
It is said that Alexander the Great found a valley full of both diamonds and poisonous snakes. No one could work out how to retrieve the jewels until Alexander had the idea of throwing down raw meat, to which the diamonds attached. When eagles flew down for the meat, Alexander's men just had to follow them to their nests.
It sounds like fantasy but diamonds are attracted to fat, and the story reminded people how to tell real diamonds from fakes. De Beers still practise Alexander's trick in their South Africa mines today: They use "grease tables" and only the valuable stones stick.
Today, most engagement rings are diamond but after the war, people wanted holidays, cars or colorful gems to celebrate a future marriage.
In 1947 a New York copywriter, given the task of finding a slogan for her client's product, stayed late in the office. "I put my head down and said: 'Please God, send me a line.'" Then she scribbled: "A Diamond is Forever" and the rest is History.
Buying Loose Diamonds, Engagement Rings, Wedding Bands, & Wedding Rings: Trust and Verify.
Marshall Loeb of Market Watch quotes our friend and colleague, Jay Mednikow with advice to consumers on how to safely shop for loose diamonds, engagement rings, wedding rings and bands, both in jewlery stores and through internet websites. It is advice we agree with 100% and worth following.
Few purchases are more mystifying for first-time buyers than fine jewelry. There's more information out there than ever - from jewelers' Web sites and online forums to nearly ubiquitous grading reports from independent labs. But buying expensive gems and precious metals is still largely a matter of trust between you and the jeweler.
First, educate yourself on the basics. For diamonds, that means the four Cs: cut, color, clarity and carat weight. For gold, platinum and silver, it means purity.
You can find helpful information on these fundamentals from the Federal Trade Commission ( FTC) and the Better Business Bureau (BBB). The Gemological Institute of America, the most prominent diamond grading agency, provides tutorials on buying diamonds and colored gems at (GIA Education).
"It's less of a blind purchase than it used to be," says Jay Mednikow, president of 115-year-old Mednikow Jewelers in Memphis and Atlanta. "But a jeweler who knows what he's doing can take advantage of you if he wants to."
Thus, there is still no substitute for a reliable dealer with an established reputation. Many jewelers are GIA-certified gemologists and display their credentials prominently.
For diamonds, Mednikow recommends buying only those with grading certificates from GIA, the American Gem Society or another independent laboratory. If a jeweler says he can offer you an uncertified diamond at a discount, tell him you'll pay to have it analyzed since the cost should be only $50 to $300 depending on the size of the stone. Read warranty and return policies carefully and make sure all guarantees are written on your sales receipt - it's your legal contract.
You may have a hard time distinguishing between slight variations in color and clarity, but still trust your own eyes.
Mednikow recommends holding diamonds with a pair of tweezers over your finger or against a white background and under lights of different types and varying brightness. With shapes other than round-cut, which has standard specifications, and with colored gems, you will have to rely much more on the jeweler's expertise.
If you are buying a colored stone such as a ruby, sapphire or diamond, ask if it has been "treated" to enhance the color. Some processes are routine, like heating for sapphires and rubies and oiling for emeralds, but others are temporary or undesirable.
Up to half the gold jewelry sold in the U.S. bears a false karat rating, says Mednikow. Choosing a reliable merchant is your only insurance, although national retailers like Zales and Sears are diligent about the purity of their gold.
Guess Where You Can Buy Diamonds & Jewelry? You Won't Believe It!
Idex Research today reports that Specialty jewelers who lament that they are losing sales to discounters, department stores, and many other retail categories are correct. Just-released information from the U.S. Department of Commerce reveals that for every specialty jeweler in the U.S., there are three other merchants – whose primary business is not jewelry – who are also selling diamonds, precious metals, and other goods that have traditionally been the domain of specialty jewelers.
There are just over 128,000 retailers in the U.S. who sell jewelry in their stores, according to the latest Business Census data from the U.S. Department of Commerce. Roughly 28,000 of those stores, or about 22 percent of all jewelry retail outlets, are specialty jewelers; the others represent a wide variety of retail categories including department stores, general merchandise stores, warehouse clubs, apparel retailers, non-store retailers, and a number of other specialty retailers. The graph below illustrates the mix of specialty jewelers to total retailers of jewelry in the U.S.
Stores Selling Jewelry by Category
Percent of Total of 128,000 Stores
Source: Dept. of Commerce
Because jewelry is such an attractive industry – gross margins are healthy and the long term characteristics of demand are positive – there are many merchants who are trying to sell jewelry.
Further, as a result of few barriers to entry, retailing attracts a large number of merchants who will try to sell anything to make a profit.
The bad news for specialty jewelers is that they are losing market share to those merchants whose business is not primarily selling jewelry. Over the past decade, specialty jewelers’ market share in the U.S. has dropped from about 50 percent to just over 47 percent, as the graph below illustrates.
There may be some surprises among the list of retailers who are gaining – and those who are losing – market share in the jewelry category. As expected, non-store retailers have among the strongest growth of any retail category. Stores that retail sporting goods, hobby supplies, books, and music (a single category, according to the Department of Commerce) have also posted strong jewelry sales gain, though this category generated an aggregate of just over $100 million in sales. That was just enough to be included on the Idex list, which analyzes only retail categories with $100 million or more in annual jewelry sales.
A graph of those retail categories that are gaining market share and those which are losing market share is shown below. These are all of the retail categories which report that they have $100 million or more of jewelry sales annually.
U.S. Specialty Jewelers’ Market Share
Source: Dept. of Commerce
Who Is Taking Jewelry Market Share?
Sales Growth over Past Ten Years by Retail Category
In addition to the list of logical purveyors of jewelry, there are a number of surprises on this list of jewelry outlets. For example, the Commerce Department’s Business Census, lists 117 stores which primarily sell beer and wine that also sell jewelry. You can gas up your car at 178 gasoline stations that also sell jewelry. In addition, there are about 385 convenience stores (such as 7-Eleven) which sell jewelry; 1,210 book stores sell jewelry; and, 37 pet stores also sell jewelry. In the prior Business Census (1997) about 85 automobile dealers also sold jewelry; by 2002, however, those car dealers apparently had stopped selling gemstones and watches.
Here’s an exhaustive list of all merchants who sell jewelry, but whose primary product line is not jewelry.
* Furniture & furnishings stores
* Consumer electronics stores
* Appliance stores
* Home centers, including building materials, lawn & garden supplies, nurseries, farm supply and hardware stores
* Grocery stores, supermarkets, convenience stores
* Fruit, vegetable, confectionery, and nut stores
* Beer, wine, and liquor stores
* Cosmetics, beauty supplies, and perfume stores
* Optical goods stores
* Gasoline stations
* Clothing stores, including men’s wear, women’s wear, children and family clothing, shoe stores, and infants’ stores
* Luggage and leather goods stores
* Sporting goods, hobby, and musical instrument stores
* Sewing, needlework, and piece goods shops
* Book stores, news dealers, college book shops
* Music stores
* Department stores
* Warehouse clubs
* Variety stores
* Florists
* Office supply, stationery, and gift shops
* Used merchandise stores (pawn shops are included in this category)
* Pet stores, art dealers, tobacco stores
* Electronic shopping and mail-order retailers
* Vending machine operators and direct selling, including in-home sales
Zales COO Resigns.
Management shifts continue at Zale Corp. as the company announced the departure of another top executive, Sue Gove, executive vice president, chief operating officer and member of Zale's board of directors.
Gove resigned as an officer and director effective immediately, according to a Zale release issued Thursday. She follows former CEO Mary Forte and former Zales Jewelers' president Paul Leonard, both of whom left the company earlier this year.
"The company would like to thank Sue for her many contributions over the last 25 years, and we wish her well in her future endeavors," Richard Marcus, chairman of Zale's board of directors, said in the statement. "We are very appreciative of the talent, dedication and passion she brought to the business."
Zale is currently operating with an interim CEO, Betsy Burton, and has not named a successor to Forte.
Expect a continued Management shake-up at Zales who have been losing money at a rapid rate as we have chronicled here: Zales Loss . Increased competition from the Internet and the flight to diamond and jewelry quality by consumers are a few of the reasons for Zales downward spiral.
I hope the Zales Board of Directors at least gave her a Gold Watch on her way out the door.
David Yurman Jewelry: Evolution of a Jewelry Designer.
The Orlando Sentinel has an interesting feature on David Yurman today.
David Yurman jewelry is like your favorite blue jeans -- only much more expensive. The jewelry is "comfortable," says Yurman, 63, who recently visited his new boutique, which rubs shoulders with Cartier and Tiffany in Orlando's Mall at Millenia.
The jewelry is also versatile, he says. "You can wear it anywhere, day to evening." Just like blue jeans.
It wasn't always that way with jewelry. Before the 1980s, when Yurman's now-iconic cable bracelets became the most coveted, and copied, arm candy in the United States, there were two kinds of jewelry: Costume for everyday wear, and fine jewelry for special occasions.
The relaxed elegance of Yurman's designs bridged the divide. The jewelry is classic but with a modern twist that gives it go-anywhere elan.
Fashioned from gold and silver, many pieces also feature coral and turquoise, a sparkling array of gemstones and Yurman's current favorite, South Seas pearls. Signature motifs include a squared "cushion" shape, a hook-and-eye closure and the widely recognized twisting "cable" pattern.
The designs are "a combination of art, fine jewelry and fashion," says Yurman, who wears several of his creations: A ring, a bracelet and a square-faced watch.
Dressed all in black, his thick white hair swept straight back, his chin fashionably stubbled, he looks every inch the artist from Tribeca, the New York neighborhood where he and his artist wife, Sylvia, live and work.
Before designing jewelry, Yurman was a sculptor, hanging out with prominent Beat artists of the 1960s; writer Norman Mailer, painter Franz Kline, sculptor Ron Boise.
"I did these funny little silver angels," he says.
It was one of those angels, fashioned into a belt buckle, that sparked his career as a jewelry designer.
The buckle was a gift to Sybil, his girlfriend at the time. She wore it to an art opening, where it caught the eye of the gallery owner. He asked if it was for sale. Yurman said no, but Sybil said yes -- and within weeks they found themselves in the jewelry business.
Ever since, they've had good-luck angels perched on their shoulders. Their collections are in more than 450 stores around the world, and David Yurman is one of the best-known luxury brands on the planet.
Gwyneth Paltrow and Barbra Streisand wear the jewelry; Steven Spielberg and Kevin Spacey the watches; hip-hop moguls Jay-Z and Damon Dash the men's designs. Their ad campaigns have featured models Amber Valetta and Kate Moss, and the company's newest "face" is Naomi Watts -- who recently flashed Yurman earrings of rose quartz and diamonds at the Oscars.
Orlando real estate agent Virginia Morales, 49, collects Yurman bracelets. "I wear three, four at a time," she says. "My husband always knows what to give me for my birthday, anything David Yurman."
Since founding their company in 1980, the Yurmans have worked as a team.
"I have the vision; I design the collections," explains Yurman. "My wife does the styling and merchandising."
Their son, Evan, is part of their ever-expanding creative team. And let's not forget the lawyers.
The couple's designs, which range from about $300 for a simple bracelet to more than $7,000 for a multistrand couture necklace, are among the most copied in the world. Yurman is not flattered by imitators and spends $1 million a year protecting his brand.
"Copying is stealing," he says. People who wear copies are deceptive. "And that's not cool."
Worse, he says, they are supporting counterfeiters who may pay no taxes, have ties to illegal operations or use child labor.
As his company grows, Yurman finds himself more in the role of executive than artist.
"It's less like playing an instrument, more like being the leader of the band," he says. "I'm about ready to do more art work."
But that is not likely to happen anytime soon. First, he plans to introduce a line of Yurman eyewear and a Yurman fragrance, followed by Yurman handbags and luggage.
No wonder he believes in angels.
Tiffany Sales Up, Profits Down.
Tiffany & Co.’s overall net sales in fiscal 2005 rose 9 percent to $2.4 billion, and profits fell 16.3 percent to $254.7 million.
Tiffany’s attributed the decline in profit to a one time gain in December 2004. In fiscal 2004, earnings in the fourth quarter and year benefited from a pre-tax gain of $194 million as a result of the company's sale of its shares in Aber Diamond Corporation.
Retail sales in the United States rose 9 percent to $1.2 billion during the fiscal year, same-store sales rose 7 percent (branch store sales rose 7 percent and New York flagship store sales rose 5 percent.) Tiffany’s attributed comparable store sales growth to higher spending per transaction. Tiffany’s opened four stores stateside in 2005 and operated 59 Tiffany & Co. stores by year-end 2005.
Diamonds Are A Girl's Best Friend, NOT Moissanite.
Shares of jewelry maker and sole source of moissanite Charles & Colvard Ltd., fell on March 27, a day after the company forecasted lower quarterly sales due to substantially lower orders from K&G Creations.
Shares dipped $1.73, or 12.8 percent, to $11.75. The stock price is down 27 percent so far this year, adjusted for stock splits.
In a company statement on March 26, Charles & Colvard said sales for first quarter fiscal year 2006 are expected to be between $7.5 million and $8.4 million, which is 25 percent to 33 percent lower than a year ago. The company expects K&G's orders to slip due to lower orders from the 2005 merger of its customers, Federated Department Stores and May Department Stores Co.
Charles & Colvard’s board authorized the repurchase of up to one million common shares. Company shares have traded between $8.63 and $26.29 over the past year.
Loose Cushion Cut Diamond: What Is It?
The Cushion Cut is a generic name for the Old Mine Cut developed before the turn of the century; these days the name" cushion" is often used for colored stones cut in this shape.
A Cushion Cut is a square or squarish-rectangular cut with rounded corners and 58 brilliant-style facets that resemble a pillow shape, hence the name.
A hundred years ago, when Cushion Cuts were first developed, diamonds were not cleaved into two pieces of rough, as they are today; they were ground down as a single stone and the resulting polished was lumpy and thick. Cushion Cuts have very thin girdles and bigger culets than today's full-cut diamonds.
Designers are requesting Cushion Cuts with big culets, but, in general, the smaller the culet, the better the stone. Older Cushion Cuts return light in blocky patterns; newly cut ones return light in needlelike patterns.
MARKETS AND MARKETING
Cushion Cut diamonds are popular in matching pairs. They are especially being used in larger-carat earrings and also as a center stone in rings. Cushion Cuts first became popular again about ten years ago, and their popularity has increased as designers and antique dealers continue to use them.
Cushion Cuts offer a lot of weight at a moderate price. Larger Cushion Cut diamonds sell for about 30 percent less than full-cuts of the same weight, while smaller cuts sell for about the same. A 1-carat G/VS Cushion Cut stone will sell from $2,800 to $3,800. Two-carat and up stones sell in the $3,500 to $5,000 per carat range. The most popular sizes are .75 to 1.5 carats. The availability of 2-carats and up is a problem because of the high demand for larger stones, both by estate and antique dealers for replacement or repair and by manufacturers.
Look for good clarity and color. Because Cushion Cuts have very thin girdles, girdles on older ones are often chipped. Look for Cushion Cuts that are symmetrical; off-shape ones are difficult to use. Look for a medium culet that is not too heavy, unless you have a special reason to use this cut with a big culet. Pick a mounting that's appropriate for the softer reflections and refractions of a Cushion Cut. Old Mine Cuts were traditionally set in yellow gold or silver with a patina or oxidation; therefore, they look better set in matte metals rather than highly polished ones.
Odimo.com In Financial trouble
Odimo.com, one of the Internet's first diamond and jewelry websites is in deep financial trouble.
Online diamond retailer Odimo Incorporated alerted investors that the company requires additional financing to "continue its operations, meet its operational goals, and to pursue its long term strategy."
Odimo's fiscal year ended December 31, 2005, and the company released its fourth-quarter and year-end results after the markets closed on March 30. Odimo owns www.diamond.com, www.ashford.com, and www.worldofwatches.com.
In its financial statement, Odimo states: "The company is currently implementing strategies that include: (i) reducing costs, (ii) seeking equity and debt financing, and (iii) exploring the sale of the company or certain assets. There is no assurance that the company will be able to successfully implement any of these strategies. The financial statements do not include any adjustments that might result from the outcome of this uncertainty."
During the year, and as part of cost-cutting measures, Odimo and SDG Marketing agreed to terminate their agreement, to which Odimo returned $3.7 million (and $700,000) in diamond inventories to satisfy payables.
Losses for the fourth-quarter at Odimo grew to $13.9 million from $1.7 million one year earlier. Sales fell 14 percent to $18.5 million.
For the fiscal year 2005, Odimo sales were flat at $52 million, and orders decreased during the year by almost 3 percent to 151,700. The average order value however increased 3.4 percent to $387. Gross profit was 24 percent of net sales, or $12.5 million, down from $15.1 million in 2004.
Loss from operations was $23.4 million, up from $12.5 million in 2004, inclusive of a $9.8 million non-cash charge to record the impairment of goodwill.
Engagement Ring Purchase onThe Internet: Is This A Good Deal?
Is the question being asked by a consumer this morning on Diamondtalk.com. He has seen a Princess Cut that is being listed on EIGHT different internet diamond websites at different prices!!
Discussion is here: Good Deal?
Here are the multiple listings for this one diamond:
Who really has this diamond?
2.23 I VS1 71.7% 72% GIA med-stk no gd vg no 7.42x7.27x5.21 $6209 $13847*SP
2.23 I VS1 71.7% 72% GIA med-stk no gd vg no 7.42x7.27x5.21 $6262 $13964SP
2.23 I VS1 71.7% 72% GIA med-stk no gd vg no 7.42-7.27-5.21 $6276 $13996*
2.23 I VS1 71.7% 72% GIA med-stk no gd vg no 7.42x7.27x5.21 $6291 $14029
2.23 I VS1 71.7% 72% GIA med-stk no gd vg no 7.42x7.27x5.21 $6306 $14062*S
2.23 I VS1 71.7% 72% GIA med-stk no gd vg no 7.42x7.27x5.21 $6308 $14066*SP
2.23 I VS1 71.7% 72% GIA med-stk no gd vg no 7.42*7.27*5.21 $6339 $14136*S
2.23 I VS1 71.7% 72% GIA med-sl thk no gd vg no 7.42x7.27x5.21 $7198 $16051
This diamond is supplied by the manufacturer to many internet websites and is known as a "Virtual Diamond".
Little if any information is provided save for a few numbers off the lab grading report and the price. You are buying blind.
We have blogged on this topic several times. Same Diamond Listed All Over The Internet?
Virtual Diamond (VD) databases do not give you the necessary information you need, e.g.; photo's, Imagescopes, and light performance data such as provided by the Gemex Brilliancescope. As such, these lists are useless. Would you buy a Home this way? I doubt it. Why should your diamond purchase be any different. It's also big money.
This is a big purchase not only because of the money, but even more so because of the emotion and psychology behind it. You need to get this right the first time. Work with Internet websites that give you comprehensive information.
"Diamonds Are For Ever", But Are Diamond Mines?
Cramer's Mining Weekly reports that the slogan "Diamonds may be forever", but the same cannot be said of diamond-mines.
While De Beers Consolidated Mines (DBCM), the largest producer of diamonds in South Africa, produced a record 15,2-millioncarats last year, it estimates that it will produce just over 14-million carats this year.
Part and parcel of new DBCM MD David Noko’s strategy is to sweat the company’s existing assets, and bring new, additional production on line.
“I do not think that we can grow production from our existing operations – we just can’t.
“Our installed capacity is fixed, and we need capital to improve it,” Noko, who was appointed as DBCM MD on February 7, tells Mining Weekly in an exclusive interview.
And, gaining approval for brownfield projects that do not meet the hurdle rates of the company’s principals is out of the question.
“There would be no point in injecting capital into declining mines like The Oaks, as a return would not be realised, but, by exception, all opportunities are being explored, the major ones being brownfields, but some being greenfields through finding partners that have large resources,” Noko says.
Hence, besides organic growth projects, DBCM’s growth strategy is levered on partnerships with smaller diamond-mining companies.
“If we partner with smaller companies, they will benefit from our knowledge, while we will benefit from the resources that they have acquired,” Noko says.
DBCM has many partnerships in Kimberley, where it has large tailings dumps that require advanced technology to turn the low grades of diamonds that they contain to proper account.
The company is also continuing to research the opportunities of working with junior miners and, in Kimberley, already 25% of revenue emerges from joint ventures with junior miners through contracts.
Diamond & Jewlery at Retail: How Much Money Is Involved?
The US jewelry retail industry generates annual revenues of about $44 billion from 28,000 specialty, department, and discount stores. Specialty retailers hold about 50 percent of the market. Wal-Mart is the biggest jewelry retailer in the country, followed by Zale, the biggest specialty jeweler with over 2,000 stores and kiosks. The industry is highly fragmented: the top 10 jewelry chains hold less than 25 percent of the market. Other large specialty retailers are Tiffany and Sterling, the US branch of British jeweler Signet Group.
Jewelry sales depend partly on consumer income. Small jewelers can effectively compete with large chains because price isn't the main factor determining retail sales. Profitability depends on the volume of sales because sales costs are high and fixed. Because gross margins are very high, often 50 percent, mass merchants like Wal-Mart have taken market share by controlling costs and cutting prices.
Jewelry is often classified as bridal merchandise (engagement, bridal and anniversary rings - about 35 percent of the market); fashion jewelry (rings, bracelets, earrings, pins, gold chains); and watches, silver flatware, and other giftware. Diamond jewelry and loose diamonds account for the largest share of total jewelry store sales (46 percent); gold jewelry for 11 percent; colored gemstone jewelry (rubies, sapphires, emeralds, etc.) 9 percent; and watches 4 percent.
Tiffany's Lucida Diamond: What is it ?
Tiffany & Co.'s Lucida is an exclusive patent pending diamond cut whose shape is a square mixed cut. It has 50 facets, a high crown, stepped facets, wide corners and a small table with a brilliant pavilion. The design of the cut maximizes the stone's sparkle and brilliance. A photo is shown below.
AGS-0 Ideal Cut Princess Diamonds have similar sparkle to the Tiffany Lucida, without the price tag!
Lucida Diamond.
Tiffany has added an eternity band and a three-stone ring as well. Lucida, which means the brightest star in a constellation, is available exclusively at Tiffany & Co. stores worldwide. The setting is copyrighted and the diamond has multiple patents pending.
The Lucida diamond is made from the same rough as a well-cut round. Created by Tiffany's gemologists, the cut is similar to the Asscher and antique Cushion Cuts. Tiffany showcases the Lucida cut in a special four-prong ring shown below. The sculptural band has clean lines and soft curves that merge with the prongs in a sloping crisscross design, which, when viewed from the side, is reminiscent of cathedral arches.
Lucida Ring.
Lucida was designed and introduced by Tiffany in 1999. The retailer has positioned the collection to fit between its classic Tiffany setting and its cuttingedge Etoile collection and has become something of a status symbol. The worldwide launch was backed by an extensive advertising campaign that included four-page inserts, spreads and single-page units in fashion and lifestyle publications. The Lucida is available at 150 locations internationally, including Japan, France and London.
Each Lucida diamond is sold with a Tiffany Certificate. The inside shank of each ring is currently engraved with the following: Copyright, Tiffany & Co. Lucida, metal fineness and the phrase "patents pending." When the patents are finalized, the actual patent numbers will be engraved in the shank.
Click on the icon below for a stunning collection of the finest Tiffany style diamond engagement rings and Ideal Cut diamonds at outstanding values!!
Do You Know How To Buy Your Diamond Engagement Ring?
NOT as this couple unfortunately found out. Be A Smart Diamond Shopper
We totally agree. Here are our recommendations for your safe diamond engagement and wedding ring shopping:
1. Work with a reputable Jeweler; be it Brick & Mortar (B&M) or Internet. Check with your local BBB and the Jewelers Vigilance Committe (www.jvclegal.org)
2. Know what you're buying. Make sure your diamond has a lab grading report. The two most stringent, accurate, and consistent diamond grading labs are the GIA (Gemological Institute of America) and the AGS (Americn Gemological Society). Insist on them.
3. If you're more comfortable shopping with a B&M Jeweler, look at as many diamonds as you can and away from the diamond counter's high intensity halogen lights which tend to make even the ugliest darkest diamonds look D-Flawless.
4. If you're shopping with an Internet Diamond vendor, make sure that they can examine the diamond for you to determine if there are any red flags you need to know about which would dissuade you from buying the stone.
A great number of Internet Vendors sell of Virtual Diamond (VD) databases and never see the diamond you're buying. The diamond is drop-shipped directly to you from the manufacturer. We covered this topic in more detail here: Cyberspace Diamonds
5. Ask the Internet Vendor to supply you with as much information as possible, including photo's.
6. Be clear and understand the Vendor's Policies: Payment, Returns, Upgrades, etc. and any timelines or deadlines that might accompany these Policies.
7. Ask about and receive any paperwork that comes with the diamond.
8. Stay away from in-house Appraisals. Such Appaisals are inflated, will cost you undue high insurance Premiums, and is a practice that is frowned upon and not sanctioned by the reputable National Association Of Jewelry Appraisers (NAJA). Best is to get an evaluation and Appraisal from an Independent Appraiser that does not work for a Jewlery store and does not sell their own diamonds and jewelry. Contact NAJA for a llisting and location of such Appraisers.
Shop Smart. This is a big purchase not only in terms of money but also in terms of emotional significance.
Good Luck!
It Is Safe To Buy Your Diamond Engagement Ring On The Internet.
According to recent statistics from comScore Networks, online sales are already up in 2006. Gian Fulgoni, comScore chairman, said in a January press release, “The 2006 year opened on a strong note, with solid growth of 33 percent in online nontravel sales versus the same period in 2005.” He went on to optimistically predict, “It’s clear based on what we’re seeing so far in 2006 that the strength in online sales will not wane anytime soon.”
According to a comScore press release: “The growth in 2006 online consumer spending follows a year of solid gains. Total online spending for the full year 2005, including travel, reached $143.2 billion, up 22 percent over 2004. Online nontravel spending in 2005 accounted for $82.3 billion, an increase of 24 percent over 2004 levels.”With this kind of money at stake, the question is not whether a business can afford to set up an online store. The question is whether a business can afford not to.
Sales of Loose Diamonds, Diamond Engagement Rings, Diamond Rings, and Wedding Bands by reputable Internet vendors are increasing at a rapid clip. Information on the Cut quality of the diamonds such as lab grading reports, photographs, and light analyses help consumers "see" the diamond on-line and provides very useful information to making an informed purchasing decision.
Keep in mind that buying your Diamond Engagement Ring through an Internet Vendor demands the same caveat Emptor and verification as does shopping with a Brick and Mortar Jeweler.
We discussed and covered several important DO'S and DON'TS just yesterday in this Blog Entry.
Buying Your Diamond in Cyberspace
To paraphrase Sy Sims: An educated consumer makes for a very good and happy customer.
Zales Facing SEC Probe; Stock Price Drops 9%.
Diamonds may be forever, but at beleaguered jeweler Zale (ZLC: 25.16, -2.64, -9.5%) new management is surely hoping that an investigation by the Securities and Exchange Commission will be short-lived.
Shares of the Dallas-based specialty retailer lost some of their sparkle Monday, falling 9.5% after Zale disclosed the probe. The SEC subpoenaed records relating to accounting for extended service agreements, leases and accrued payroll, as well as for executive compensation, severance, earnings outlooks and stock trading.
MarketWatch sums up Zales plummeting fortunes this year thus far culminating with today's announcement that it is facing an SEC investigation.
It's more bad news from a company that has seen three top executives resign this year amid sagging sales and a slumping stock price.
"It's very murky," says Bill Armstrong, an analyst for C.L. King & Associates, a boutique research firm in Albany, N.Y. "According to what they told me, they don't even know what the SEC is looking for, as far as what it's investigating. The SEC communicated to them in very general terms."
Zale Treasurer David Sternblitz says regulators have offered little information beyond the request for records. The company has already publicly elaborated on its accounting practices for extended service agreements and leases, he says, and KPMG, Zale's auditor, has consistently given Zale a clean bill of health. "We will be cooperating fully, and the company believes that it has complied with generally accepted accounting principles," Sternblitz says.
The company's 2,345 stores in the U.S., Canada and Puerto Rico, as well as its online division, had sales of $2.38 billion in 2005 and are on track for sales of $2.40 billion this year, according to analysts surveyed by Thomson First Call. Its Zales Jewelers division accounts for about half of all revenue, and an average sale is between $200 and $300, says Armstrong. Other brands include Zales Outlet, Gordon's Jewelers, Bailey Banks & Biddle, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.
For its fiscal second quarter ended Jan. 31, Zale's earnings fell 7% year-over-year to $1.78 a share. The company reported a profit of $1.96 a share, but that figure didn't conform to generally accepted accounting principles.
The Feb. 21 earnings announcement came on the heels of the January resignation of Mary Forte, president and chief executive, and the February resignation of Paul Leonard, president of the Zales Jewelers division. Sue Gove, chief operating officer, quit last month. Mary E. "Betsy" Burton was named interim CEO on Jan. 31.
Change at the top can muddy the waters beneath, says Alan Ratliff, a partner at Stone Turn Group, a forensic accounting firm in Houston. Generally, he says, situations like the one at Zale could attract some extra attention from regulators.
"I would say that every one of those [areas covered by the SEC subpoena] listed is the subject of one or more interpretive accounting standards, where someone could interpret it in a particular way and be just over the line," Ratliff says. "In the context of a company where the top management resigns or gets fired, it could be something like that."
The timing of extended service agreement revenues, in particular, is an area that's ripe for trouble, says Ratliff. "When do you report revenue? Over the life of the contract, or immediately, and then have an immediate result?" he says. "If someone reports that as revenue to make things look better, or creates a huge reserve they don't necessarily need, the issues of timing can come up anytime."
Sternblitz agrees the recent management turnover is likely a reason for the SEC's interest.
"My guess would be that requesting this type of information, such as earnings guidance and compensation, is probably standard practice in order for the SEC to determine if any person profited from the issues that are in questions," the treasurer says. "Some of our executives are scheduled to talk to the SEC next month, but they haven't given us a timetable in terms of their investigation."
Zale's main priority apart from the investigation is to find a new CEO, says Sternblitz. The company has a short list of candidates and should name a new chief within three months.
Shares are down nearly 20% since. Management upheaval, disappointing financials and now accounting questions have contributed to the decline.
That said, the jewelry business isn't such a bad place to be as the population of aging and affluent customers expands. "In general, baby boomers are in their peak earnings and jewelry-buying years," says Armstrong. "I think demographic trends are generally favorable to the jewelry industry."
Unfortunately for Zale, others are lining up to lure those deep-pocketed shoppers. The company faces intense competition from Kay Jewelers, its retail rival in malls across America, as well as from jewelry departments at larger retailers such as Wal-Mart Stores (WMT: 45.70, -0.32, -0.7%), J.C. Penney (JCP: 58.47, -1.54, -2.6%), Kohl's (KSS: 53.95, +0.55, +1.0%) and T.J. Maxx (TJX: 24.41, -0.06, -0.3%).
Zale's new management needs to move away from heavy promotional discounts and regain market share, wrote Brian Tunick, an analyst at J.P. Morgan, in a Feb. 17 research note that came out just after Valentine's Day, a key time for jewelry purchases. Zale's business prospects will become clearer, he wrote, by year's end once the critical holiday gift-giving season has come to a close.
Internet Diamond & Jewelry Websites Show Biggest Gain.
Idex reports that Internet Diamond Websites are showing the biggest Sales Increase for the First Quarter compared to other more traditional Retail Brick & Mortar Jewelers.
The Cost Of "Love" Keeps Going Up!
THE price of love just got higher – much higher.
The soaring price of gold, which yesterday hit $US615.08 an ounce, might be good news for resource companies but it has pushed the cost of producing jewellery up by almost 50 per cent.
Aaron Wilson, director of Melbourne company Michael Wilson Diamond Jewellers, said the value of the gold in an average diamond engagement ring had risen by about $100 in the past 12 months.
The price of platinum had also sky-rocketed.
"The jewelery industry, especially hand-made diamond rings, is a very competitive market," he said.
"It makes it very difficult for us. People don't like the prices being put up (so) we try to absorb it as much as possible." The price of gold is now at a 25-year high, having risen about 5 per cent this month on the back of concerns about Iran's nuclear intentions.
As the spot price of gold continued to gain strength, the miners kicked along.
Newcrest Mining picked up 61¢ to $22.86, Newmont gained 36¢ to $7.54, Kingsgate Consolidated was up 17¢ at $6.26 and Lihir up 14¢ at $2.96.
Gold stocks reaped the benefit yesterday, with Lihir Gold up almost 5 per cent to $2.96, Newcrest 61 higher at $22.86 and Oxiana climbing 10 to $2.85.
Analysts said people were buying gold as a safe haven and an inflationary hedge.
Mr Wilson, who grew up in the family business, said the soaring gold price – up 40 per cent since April last year – was unprecedented.
"In the past 12 months it's gone up more than I've ever seen it," he said.
Iran Affecting Diamond & Jewelry Prices.
Commodities prices roared to new peaks on Tuesday as fund buying restarted, triggered by fears over the nuclear stand-off in Iran and the impact of surging economic growth in China, investors said.
The oil market hit a new record peak, taking key industrial metals prices with it and propelling precious metals to their highest since the early 1980s.
"The fundamental factors are the intensifying of the political situation in the Mideast Gulf and the Chinese GDP figures, which got everyone back to thinking China is eating up global natural resources," a fund manager said.
China's economy is on course for growth of at least nine percent this year signalling accelerating imports of energy and raw materials.
Fears about Iran's row with the West over the country's nuclear program sparked oil's latest rise.
IPE Brent crude set a fresh high of $72.20 per barrel before falling to $72.03 at 0847 GMT.
Brent has rallied from below $60 in December, buoyed by a fresh flow of fund investment amid mounting concern over Iran and the possibility of U.S. military action against the world's fourth largest oil producer.
"If we look forward it's continued economic growth and a potentially disastrous situation in the Mideast Gulf," the fund source said.
Most commodity indexes, which between them have attracted around $80 billion of speculative investment into the markets, are weighted heavily towards oil.
Fasten Your seatbelts!
Mothers Love Diamonds.
Children, Mother's Day is fast approaching.
Mother knows best...when it comes to driving gift sales, as American moms are expected to motivate $13.8 billion in retail gift buying this year, finds the National Retail Federation (NRF) 2006 Mother's Day Consumer Intentions and Actions Survey.
Jewelry gifts are expected to account for $2.1 billion In Mother's Day sales, compared to the $1.7 billion spent on jewelry for the holiday last year. That's second only to the $2.8 billion that NRF's survey indicates will be spent taking moms out for brunch or dinner, up from the $2.2 billion shelled out for celebratory Mother's Day comestibles in 2005.
The average Mother's Day shopper expects to spend $122.16 this year, according to NRF, up from $104.63 last year. Popular gifts include: greeting cards, which 85.4 percent of respondents said they'll be giving mom this year; flowers, which 67.6 percent of respondents expect to purchase; gift certificates or gift cards, on the list for 31.9 percent of shoppers; books or CDs, which 25.8 percent plan to give; and electronics or computer-related accessories, which 6.7 percent plan on giving mom.
"Consumers certainly enjoy splurging on luxury items, such as fancy meals and jewelry, but greeting cards and flowers still remain favorite tokens of their appreciation," Phil Rist, vice president of strategy at BIGresearch (which conducts the NRF survey), said in an NRF release. "No price tag is too high when it comes to showing mom the love and appreciation she deserves."
Men are expected to spend more than women on the holiday, with the average male expected to devote at least $148.51 on mom, compared to the $97.72 women are expected to spend.
Moms aren't the holiday's only gift recipients, as 20.7 percent of respondents to NRF's survey said they'd be buying for wives this Mother's Day; 9.1 percent for daughters; 8.5 percent for grandmothers; 7 percent for sisters; 7 percent for friends; and 12.3 percent for other relatives.
Young adults, ages 18-24, are this year's big spenders, dropping $142.40 per person this Mother's Day, up from the $96.08 they put toward mom last year. Those aged 45-54 are expected to come in second, spending an average of $129.29 per person, followed by 25-34 year olds, who are projected to part with $122.39 each.
Hey! Do you know What a Bottega-Venatta Is?
Either did I, since Bottega Veneta may not be as widely recognized as its more famous luxe-label sisters, but to wealthy consumers, the lesser-known line is the most prestigious luxury fashion brand.
In the 2006 Luxury Brand Status Index survey (LBSI) of Luxury Fashion Designers conducted by the New York-based Luxury Institute, Bottega edged out both Hermès and Armani to claim top rating.
The Luxury Institute surveyed a national sample of more than 500 households with a minimum of $200,000 in gross annual income and a minimum net worth of $750,000.
Bottega Venatta handbag. Only $3850.00
Wealthy customers who were surveyed rated 21 leading luxury fashion brands based on their perceptions of critical brand reputation metrics. Brands rated included: Armani, Bottega Veneta, Burberry, Calvin Klein, Chanel, Christian Dior, Coach, Dolce & Gabbana, Façonnable, Fendi, Ferragamo, Gucci, Hermès, Hugo Boss, Izod, Lacoste, Louis Vuitton, Marc Jacobs, Polo Ralph Lauren, Prada, Versace and Yves St. Laurent
Bottega Veneta's relatively low public awareness level of 21 percent, versus Hermès, which garnered 55 percent recognition, and Armani, which drew 74 percent, portends a strong future for the classic Italian brand, which is part of the Gucci Group portfolio.
"Those who know the brand rated it highest in quality, highest in uniqueness and exclusivity, as the brand most used by people who are admired and respected, and the brand most able to make its customers feel special," Milton Pedraza, CEO of the Luxury Institute, said in a release. "No surprise then, that it was rated the most worthy of a significant price premium."
The Luxury Institute's independent surveys are designed to measure brand performance from the perspective of the wealthy consumer. Publications include the monthly Wealth Report, the Luxury Brand Status Index surveys, the Luxury Best Practices surveys and the Luxury Consumer Experience Index surveys.
Now You Can Buy Her Diamond Engagement Ring In Your Frozen Food Section.
At one time the single person --who was in search of a partner-- might have been found lurking near the one-person meal display in their local supermarket.
Now, Irish Supermarket Chain, Tesco, thinks they have taken the business of romance a step further by stocking diamond solitaire rings.
The new Tesco ($83) ring features a 1/10th-carat stone in a 9-karat gold setting, while the most expensive ring -- at $2,307 -- will have an 18-karat gold setting and a 1-carat diamond.
Tesco's diamond solitaire rings went on sale in 26 stores displayed in secure glass cases, but Tesco Ireland said they have no immediate plans to follow suit.
The supermarket chain has employed its own team of experts to work with diamond suppliers and designers on what it regards as a new growth market in "the democratisation of diamonds."
"I like the idea that everybody can have a diamond without spending a fortune," said Susan Farmer, the public relations consultant for the Diamond Trading Company, the marketing arm of the De Beers group. "It is taking a bit of the magic away, buying your engagement ring in a supermarket. An engagement ring is something they will wear every day of their lives, so it's important to get the best you can afford."
However, Alison Ladd, the head jewelry buyer at Tesco, said, "Everyone wants the best possible stone, especially for that special piece like an engagement ring, but not everyone has deep pockets."
As Mel Allen used to say, "Howa 'bout that!" Sheesh, talk about taking the romance out of a very special moment.
In our opinion this move stinks.
Belgian Gov't Reduces Taxes On Diamond Companies.
At the end of 2005, a new fiscal law was adopted that will make Belgium far more attractive to all companies doing business there —which means not only diamond companies, but firms from all business sectors and industries.
The principle of the new program relies on what’s been referred to as a “notional interest rate.” As of accounting year 2006, all Belgium-based companies will have the opportunity to calculate a totally fictitious interest rate on their equity. This interest rate — which is currently between 3.442 and 3.942 percent — will be deductible from the taxable profit, a measure that is likely to reduce the taxable profit of businesses to verylow levels. The effective tax burden, especially for larger capitalized companies, could drop from the usual 28 or 34 percent corporate income tax rate to the negligible figure of 6 percent in the best cases.
The new tax law does not have any stringent conditions — no employment condition, no investment condition, applicable to all companies, no limitation on activity — and will restore the balance between Antwerp and other competing diamond centers.
Kaushik Mehta of Eurostar Diamond Traders, however, has a different opinion: “It’s very good as you pay less tax. The notional interest will certainly help ease business in Belgium, but it’s still no match for Dubai, at least as far as their zero tax is concerned. Antwerp has other assets, such as a huge market, to compete with other diamond centers.”
The notional interest tax plan will also assist with respect to DeBeers Diamond Trading Company (DTC) and the Banks. The diamond industryr is typically a sector that requires large working capital and relatively small profit margins, and a substantial number of companies have capital booked as current account. Currently, this cannot be taken into consideration for the notional interest deduction and is booked as a loan. From this year onward, registration fees on capital increases of 0.5 percent are abolished and there is virtually no cost involved anymore in increasing the statutory capital. Therefore, it is useful to incorporate the loans/current accounts into statutory capital. This, of course, can substantially increase the equity of the company, which also results in an improved solvability toward third parties — this is equity against balance sheet total. Banks are, indeed, pushing diamond companies to move toward an equity of 15 percent-plus because traditionally the equity of Belgian diamond companies is very low. Also, for sightholders, DeBeers takes into consideration the financial strength of a company, which is reflected in the equity and solvability ratio.
Consequently, the larger the capital, the higher the amount of the notional interest deduction. This allows companies with larger capital to pay lower taxes on their profit and as a result have higher net profits, which, again, they can capitalize. The following year, the equity has grown with the increased net profits of the previous year on which the notional interest deduction is applicable. So, this creates a rollerball effect in which equities grow quicker and quicker and are constantly leveraged with the notional interest deduction the following year.
It’s been understood that the measure would also benefit smaller-size companies, depending on their degree of capitalization, as the law applies to all corporate entities. Percentwise, it can create the same result, but, of course, the nominal amounts are smaller.
The first cycle of the system will be completed within the year. Tax reduction is positive in that it spurs production and eventual tax revenue. The effects on consumer prices remains to be determined.
Web Analytics Vendor warns a fifth of pay-per-click activity may be Fraudulent.
ClickTracks Analytics has introduced updated software for detecting click fraud, saying that an average of 20 percent of a company’s pay-per-click adverting budget can be traced to fraudulent activity.
The problem stems from individuals or companies trying to increase pay-per-click online ad traffic through illegitimate means. By driving up traffic on ads that show up next to search results, they would get more revenue from the advertiser.
In some cases, the fraud involves using software robots to do the extra clicking, or hiring people to click repeatedly on the ads.
The Santa Cruz, California-based company’s products, ClickTracks Professional and ClickTracks JDC, compare different statistics from the ads and highlight variances that show evidence of suspicious activity. The technology works with the Google, Yahoo, and MSN search engines.
The software highlights statistics such as the number of clicks that come from a certain country, the number of sessions with no referrer site for the click, and the number of different IP addresses.
‘An automated bot flies right underneath the wire.’ says Michael Stebbins, of Clicktracks.
Joe Tedd, operations manager at the New York City-based diamond e-tailer DiamondHarmony.com, has been testing the products on his site. “Since we began using it, which was at the start of the holiday shopping season for ’05, it helped us identify up to $10,000 in fraudulent clicks,” he said. “The tool paid off for us in the time we began beta testing.”
DiamondHarmony spends close to $30,000 per month on online advertising. Mr. Tedd said that without a click fraud tool, his company would not have noticed suspicious activity until much later this year.
At first, he had difficulty confronting the search engine where the suspicious activity originated. The company wouldn’t believe him until he produced detailed reports that prompted the search engine to acknowledge there was a technical glitch and give DiamondHarmony a refund.
While the technical glitch by itself accounted for a proportion of the extra clicks on his company’s ads, Mr. Tedd believes some fraudulent activity also occurred that exploited the technical glitch.
“We debugged something for them that they had never encountered before, and they realized the issue was something on their side,” he said.
Michael Stebbins, vice president of marketing at ClickTracks, said there are click farms run from India and China that drive up click traffic, and sophisticated software robots that can be difficult for many web advertisers to detect. “An automated bot flies right underneath the wire,” he said.
ClickTracks’ 7,000 customers include major companies like Coca-Cola, Intuit, NASA, Nokia, Nordstrom, Pfizer, and Volkswagen.
Pay Per Click (PPC) advertising is big revenue for Google, Yahoo, and MSN and getting more expensive all the time.
Indeed, BlueNile, a leading diamond e-tailer partly ascribed their lower 4th Quarter 2005 earnings results to significantly increased PPC advertising costs.
Diamond Sales Increasing.
Consumer drive for diamonds hasn't waned in the past decade, with the Diamond Information Center (DIC) reporting 2005 as the 10th consecutive year of retail diamond jewelry's growth in the U.S.
Diamond jewelry sales rose in 2005 to $33.7 billion, up 7 percent from $31.5 billion in 2005. In addition to the growth of overall U.S. sales, which comprise more than 50 percent of worldwide sales, transactions grew by 3 percent and average ticket prices were up by 4 percent.
Canada Drops Jewelry Excise Tax!
The Canadian Government today abolished it's jewelry excise tax.
Canada's conservative majority in government dropped a number of excise taxes on May 2 to create "a more competitive business tax system," said Jim Flaherty, the country's finance minister.
Along with the tax changes, Canada's jewelry excise tax was eliminated. In June 2005, Parliament voted to abolish the jewelry excise tax over a period of 5 years.
"Jewelry is available at all price levels and is purchased by a wide range of Canadian households," the budget report read. "Repeal of the Excise Tax will recognize this and ensure that the Canadian jewelry industry is able to compete on a fair and equitable basis with other retail and manufacturing businesses in Canada. It will also serve to reduce the compliance burden on the jewelry industry, a particular benefit to small businesses.”
The Canadian Jewellers Association (CJA) briefed the industry on the news. Morris Robinson, chair for the group's government relations committee, said, “We are delighted that the conservative government has ended the inequity and confusion inherent in the Excise Tax in the content of minister Flaherty’s budget.
According to a statement by CJA, the "vote of confidence to our industry is the result of many group and individual efforts, specifically to the Prime Minister [Stephen Harper] for honoring his campaign promise to our sector."
Are you listening U.S. Congress? Get rid of these consumption taxes!!
Fortunoff Goes Outside family To Name new CEO.
Long Island, N.Y.-based retailer Fortunoff has appointed a former Federated executive to be its new CEO, the company announced Thursday.
Helming the chain will be Arnold Orlick, who most recently served as chairman and CEO of Rich's/Lazarus/Goldsmith's, which was the Atlanta-based division of Federated Department Stores, prior to the changeover to the Macy's nameplate that occurred after the Federated-May Co. merger. Orlick was also a former director of stores for Bloomingdale's and held senior positions at Robinson's Department Stores and Abraham & Strauss.
Fortunoff operates six jewelry and home furnishing stores in New Jersey and New York and Fortunoff Backyard/Furniture stores throughout the metropolitan New York area.
Private equity investors Trimaran Capital Partners and Kier Group acquired Fortunoff in July 2005, in partnership with the Fortunoff and Mayrock families. The Fortunoff family has continued to run the business since the acquisition.
Diamond Branding: The View from Tiffany's.
Diamonds may be forever, but repeat purchases are always welcome -- even at a world-renowned and exclusive luxury goods outfit such as Tiffany's, the Fifth Avenue, New York-based jeweler.
The company's Irish-American president James Quinn says that once-off purchases of expensive jewelry are complemented by satisfied customers adding to their collections and accessorizing.
The rare, exquisitely cut and polished stones have been part of Quinn's life for the best part of 20 years since he joined Tiffany & Co in 1986. Nice work if you can get it.
"We work with things of beauty," the 55-year old said with a smile. "Part of our mission is to create objects of beauty and enduring value and they are purchased at the most important occasions in people's lives. It's a fun place to work."
The president of the world-famous jewelers was in Ireland recently wearing his other hat -- that of chairman of the North American board, UCD Smurfit School of Business. As part of a conference on building successful companies hosted by the school and Enterprise Ireland, Quinn addressed Irish business leaders on the importance of brand-building.
"A brand in its purest form is simply the delivery of a guaranteed set of standards and qualities and, over time, you become famous for that and instinctively people understand what the brand communicates," says Quinn.
"It's never too early for a company to start thinking about what they want to stand for because some day they hope to be famous for it and you need to have a set of standards for at least four different stakeholders: your customers, so that they understand the product, what they should expect and over time what they will trust; your employees, so that they understand how they'll be treated, what is expected of them and how they will be rewarded and recognized; your shareholders, and the communities that you work in."
More Shakeups At Zales.
Zale Corporation's chief financial officer, Mark Lenz, was placed on administrative leave effective May 5. The move came after outside auditors for Zale reported that Lenz failed to disclose (in a timely manner) vendor payments scheduled for the final two weeks of Zale's fiscal year, which ended July 31, 2005.
The omission of vendor payments resulted in Zale reporting a higher net cash flow from operating activities, but the company states that cash payables were "properly reflected on the balance sheet."
Early in April 2006, Zale reported that it was cooperating with the Securities and Exchange Commission investigation regarding accounting practices, executive pay, and other matters.
Acting Zale CEO, Betsy Burton, said, "The company's board of directors concluded that based on this information a change in chief financial officers was appropriate."
George Mihalko was appointed to oversee chief financial officer duties, and will also take a seat on the board of directors and report directly to Burton. Before joining Zale, Mihalko had served as chief financial officer of The Sports Authority retail chain, and held executive positions at Pier 1 Imports, Burlington Northern Inc., and Firestone Tire & Rubber Company.
Brother, Can You Spare 10 Million?
House of Taylor Jewelry, which suffered losses for its fiscal year 2005, has secured $10 million in financing from investors to buy inventory and to use for marketing and working capital.
House of Taylor Jewelry saw sales of $5.61 million and a net loss of $3.5 million for the year ended Dec. 31, 2005. It attributes the loss to numerous factors, including a restructuring, a focus on designing and sourcing new products; developing sales and marketing strategies; reducing inventory of discontinued product; and increased research, development and marketing, according to a May 1 2006, press release from the company.
In May 2005, the company underwent a restructuring after acquiring the licenses to market jewelry under several new brand names including Elizabeth and House of Taylor Jewelry (both designed by Hollywood legend Elizabeth Taylor) and Kathy Ireland for House of Taylor Jewelry (designed by retail mogul and former model Kathy Ireland).
The company launched the new merchandise during the Las Vegas market week in June. In connection with the restructuring, the company saw one-time expenses of $656,000 and non-cash amortization of about $590,000. This year, it will be back in Vegas with new merchandise.
Is there such a thing as a "Born Again Sucker?" Sure looks like it!
Diamond And Pink Sapphire Earings.
.91 carat weight Diamonds and 1.40 carat weight Pink Sapphires in Platinum. Chris saw a smaller version at Tiffany's and asked us to replicate this design with bigger stones. Chris is getting married this Saturday.
Congratulations, Chris!!
Zales Searching for New CEO.
Zale Corp. has narrowed its search for a new chief executive to two leading candidates from outside the jewelry retailer, though a final decision likely won't be made for several weeks.
Mary "Betsy" Burton, a Zale board member who assumed the interim CEO job upon Mary Forte's dismissal in January, said Thursday that the search remains open though Zale has identified "a couple of excellent candidates."
Burton added that a Securities and Exchange Commission investigation of Zale's accounting announced last month hasn't deterred candidates in the search pool. Even so, an announcement isn't imminent.
"There is a concern that we're in the throes of finalizing holiday (strategies)," Burton said in an interview. "To put someone else in at such a critical juncture might actually be more disruptive."
Irving, Texas-based Zale, a retailer of diamonds and jewelry, collects most of its net in the Christmas quarter, its fiscal second. Zale ranks as the No. 2 specialty jewelry retailer in the United States by marketshare behind Sterling Jewelers Inc., the U.S. arm of London-based Signet Group PLC. In the United States, Sterling operates the Kay Jewelers and Jared the Galleria of Jewelry brands. Also in the U.S., Zale operates Zales Jewelers; Zales Outlet; Gordon's Jewelers; Bailey, Banks & Biddle; and Piercing Pagoda.
Forte, Zale's CEO since 2002, resigned in January after a strategy to shift flagship brand Zales Jewelers to a more fashionable, upscale clientele tarnished the retailer's holiday results. Following her out the door were Zales Jewelers President Paul Leonard in February and Chief Operating Officer Sue Gove in March. Zale issued the three nearly $13 million combined in severance pay
Tiffany To Open In Germany.
Hamburg, Germany, is now on the list of cities set to open a new Tiffany & Co. The diamond and jewelry retailer announced its new store would open mid-year 2007 with approximately 2,400 square feet of retail space near Neur Wall 19. Hamburg is Germany's second largest city behind Berlin. Tiffany already operates stores in Frankfurt and Munich.
The jeweler will offer its renowned collections, including its engagement diamonds and jewels, rare and lustrous pearls, fashion jewelry and watches, and the signature designs of: Elsa Peretti, Paloma Picasso, Jean Schlumberger, and Frank Gehry.
Survey Highlighlights Importance of Diamond and Jewelry Branding
Diamond and diamond jewelry brands continue to see increased awareness among consumers, according to a survey of 2,571 members of the Jewelry Consumer Opinion Council (JCOC) conducted from May 31 to June 12.
A media release from JCOC stated the leader of the branding pack is the Zale Diamond. It remains the strongest diamond brand since the survey was last conducted in October 2004. It is followed closely by Hearts On Fire, Radiant and the Leo Diamond. While consumers say a brand name is still the least important factor in driving the diamond purchase, they acknowledge that brands are gaining importance.
Among the changes since the 2004 survey: Hearts On Fire has gained recognition in the past two years; consumers are naming more diamond brands, such as Lucida and the Princess Plus; more respondents are saying they own a branded diamond, while a smaller percentage are citing a lack of awareness for not owning one; a larger percentage of respondents say they own branded diamond jewelry such as Vera Wang, Scott Kay and Escada; and consumers say they are slightly more willing to pay higher prices for branded diamond jewelry versus two years ago.
"It's extremely difficult to establish specific brand awareness with consumers," said Elizabeth Chatelain, president of MVI Marketing Ltd., founder of JCOC, in the release. "Although consumers are more willing to pay premium prices for branded products, making a jewelry line 'stand out' is not getting any easier. With the saturation of brands in the market, a name and logo is not enough to catch consumer attention. Each brand must develop a niche, a unique selling proposition, or a product attribute demanded by consumers."
While consumers were willing to pay more for a brand, they were also deterred from purchasing branded designer jewelry because of high prices, Chatelain said.
"The key to successful product branding is to design and deliver a unique product the consumer needs and prefers to other products available," she said. "Manufacturers and retailers can help consumers come to understand what exactly branded diamonds and diamond jewelry are, and that the consumer has increased flexibility in choosing."
Rent-A-Diamond: It's Here!
From today's U.K. Daily Mail:
Jeweler Rachel Kerr has come up with a gem of an idea -- renting out diamonds for the day.
The 27-year-old entrepreneur has launched what is believed to be Scotland's first jewelry hire service, allowing her clients to borrow enough glitz to feel glam on that big occasion.
She unveiled her new online store www.rkjewelleryhire.com two weeks ago, and has already lent diamonds and gold worth thousands of pounds for less than the price of a piece of costume jewelry.
Miss Kerr has adopted Elizabeth Taylor's famous line 'Big Girls need Big Diamonds' as the shop's motto.
Yesterday, she said, "I've worked in jewelry shops and always thought there would be a market for something like this, particularly among brides."
"I know of a girl in London who's doing the same thing, but as far as I know, the service I provide is unique in Scotland.
"Film stars are lent jewelry for awards ceremonies all the time, so I thought regular people should be offered the same service." Prices start at GBP40 for a three-day hire of a piece worth 10 times that to GBP130 for a GBP1,600 item.
The range is not quite in the league of the GBP2 million, 157-carat diamond necklace worn by Scarlett Johansson to the 2004 Baftas, but she believes in starting small and thinking big.
"The largest piece we offer is a half-carat diamond necklace, which has already caught the eye of several brides," said Kerr, who began her online business, based in Hamilton, Lanarkshire, after plans to open a standard jewelry shop fell through.
"I drew up a business plan but soon realised we could not compete with the multiple retailers.
"So I came up with this.
"We take the items to customers to try on, then deliver them for the occasion and collect them afterwards. To start, I'm looking at four customers a week. We have to visit each client three times, so it will keep us busy."
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Interesting idea. Let's see how this develops.
Zales Tries To UpTurn It's Diamond Fortunes
Zale Corp. has announced that Betsy Burton, its acting chief executive officer, will be president and CEO, effective immediately.
She fills a spot that has been left vacant since the departure of former CEO Mary Forte in January. The company's board was so pleased with Burton's performance as the interim CEO that it decided to give her the job permanently, according to a press release announcing the appointment, issued Sunday night.
Burton, who will continue as a member of the board of directors, has served as acting CEO since February 2006. The 54-year-old executive has been a member of the Zale board of directors since 2003. She formerly served as CEO at Supercuts, PIP Printing and the Cosmetic Center. Burton is also a member of several public company boards, including Staples, Aeropostale and Rent-A-Center.
Her term as acting CEO came at a tough time for the company. In addition to Forte's departure, several other major executives, including COO Sue Gove and Paul Leonard, the former president of Zales Jewelers, also left the jewelry retailer.
The departures came amid the Dallas-based jewelry empire's loss of market share to Kay Jewelers, which made gains while Zale struggled through an ill-fated attempt to shift its focus from its core middle America customer to a more upscale shopper. Kay's parent company, Sterling Jewelers, surpassed Zale in fiscal 2005 sales for the first time in NATIONAL JEWELER's $100 Million SuperSellers list.
Adding to its woes, the U.S. Securities and Exchange Commission launched a non-public investigation into accounting and other matters at Zale Corp.
Diamond Powerhouse Fabrikant Still Breathing.
Months long reports and rumors of the collapse of 100-year old M Fabrikant & Son, a leader in the diamond and jewelry trade appear to have been greatly exaggerated.
Fabrikant announced an agreement with its domestic lenders on August 7th.
Fears of Fabrikant's demise were triggered by the filing of two lawsuits against them by Creditors. Blue Star, an Indian based manufacturer filed a lawsuit against Fabrikant seeking 5.6 million in unpaid invoices, while K P Sanghvi filed a similar lawsuit for 1.9 million.
Fabrikant, a DeBeers Diamond Rough SiteHolder, is now prompted to start worldwide review of its operations.
Stay tuned.
Zales Looking To Rebound.
Back in January 2006, Zales, a heavyweight merchant in the retail diamond and jewelry scene was reeling from its ill-conceived shift from its core customers towards a more upscale market.
Like Coca-Cola back in the '80's with its "New Coke" formula, Zales painfully discovered with its significant loss of market share that you can't abandon a classic or a business formula that had worked successfully for years.
Changing CEO's seems to have awakened Zales and made them smell the coffee.
Under new CEO Betsy Burton, Zales is getting back to what their clientele wants and has always wanted: diamond fashion rings, wedding and engagement rings, wedding bands, and bridal accessories and away from the avant garde upscale silver and gold designs.
This Holiday Shopping season which ranges from the beginning of October through Christmas will be a good indicator if Betsy Burton and Zales are back on the right track.
Ethnic Jewelry: Can It Grab Market Share?
A recent study conducted by the Jewelry Consumer Opinion Council (JCOC) reveals significant consumer awareness of ethnic-inspired jewelry.
Sixty-five percent of the study's 2,930 respondents said they would be open to purchasing quality ethnic jewelry if they knew more about the styles available and their histories.
More than one-third of respondents said fashion is a critical purchasing driver of ethnic-inspired jewelry. Nearly a third said they like to mark a trip with jewelry from the place visited, while 14 percent said they display their own ethnic pride by wearing jewelry representative of their culture.
Sixty-nine percent of respondents said they are concerned that the gems they buy are mined in an ethical way, and 63 percent said they are willing to pay more for a piece of quality ethnic jewelry depending on its origin. A majority of the respondents said they have spent up to $200 on a piece of ethnic jewelry, with nearly a quarter spending $200 to $5,000. Local craftsmen are the most popular source for consumers buying ethnic jewelry, followed by jewelry chain stores, local independent jewelers and art fairs.
GIA Symposium: Message for Retail Jewelers.
The first full day of the 2006 International Symposium got off to an early start with a breakfast speech by behavioral market research expert Paco Underhill. Underhill, the founder, CEO, and president of Envirosell Inc., an international behavioral market research and consulting company, spoke about the consumer of the 21st century, and had a stark message for jewelry retailers – the need for change.
During the course of his well attended speech, Underhill was especially tough on jewelry retailers who complain that the Internet is destroying their business. “The net is failing you because you haven’t figured out a way to use it,” he said in no uncertain terms. “If you don’t use the Internet in 2006, goodbye, because you won’t be here in 2010.”
Underhill advised the audience – which included many retailers – that they must figure out how to fit into their customers’ lives. As an example, he cited the Damas chain in the Middle East, which offers party rooms for weddings and birthday parties in which groups of women can try on jewelry in a relaxed and accessible atmosphere. “Customers have changed,” he said, “and now it is the jewelry store that needs to be refreshed.”