Retailscope

RAPAPORT... Affluent Spent Less On Jewelry in 2007

The average luxury consumer spent about 4.4 percent less on luxury goods overall in 2007, according to Unity Marketing’s 2008 Luxury Report. The report, which details the state of U.S. luxury markets, found that luxury spending was lower across the board, with the exception of experiential luxuries. Consumers spent 12 percent less on personal luxuries, though they increased experiences spending by 5.2 percent. On average, luxury consumers spent 10.8 percent less on jewelry in 2007. In 2003, nearly two-thirds of luxury consumers agreed with the statement “While luxury experiences are nice, they are fleeting, so I prefer to buy luxury items I can keep and cherish.” In 2007, only 41 percent of luxury consumers agreed, a drop of 22 percentage points. Unity’s findings also revealed that the total market for luxury contributed about $321.9 billion in consumer spending in 2007. The company surveyed 4,284 luxury consumers with an average income of $155,100, and an average age of 45 years. Women comprised 64 percent of the respondents, while men totaled 36 percent.

Zale Replaces KPMG

Zale Corporation chose Ernst & Young to serve as the company’s independent public accountants for the fiscal year ended July 31, 2008, replacing Klynveld Peat Marwick Goerdeler (KPMG). Zale said the change eliminates any questions as to whether KPMG’s independence could be impacted by Richard C. Breeden, KPMG’s monitor, and James Cotter, a member of the monitoring team, both of whom serve on Zale’s board of directors. Zale stressed that the switch was not about any disagreement on accounting principles, which would have been referenced by KPMG in its consolidated financial statements.

Whitehall Expands Web-Based Network

Chicago-based diamond retailer Whitehall Jewelers, Inc., signed a $1.6 million multiyear contract with New Edge Networks, renewing an agreement pertaining to the management of its private network. The deal expanded the network’s reach to include the 78 stores Whitehall recently acquired from Friedman’s and Crescent Jewelers. Utilizing DSL technology, the private wide area network (WAN) will link all stores and support store transaction processing, sales polling, a web-based company intranet and corporate email. The deal also provides a dedicated support team.

Tiffany opens in Seoul

Tiffany & Co. opened a 1,700-square-foot shop at the Shinsegae Gangnam department store in Seoul, Korea. Its offerings include the collections of Elsa Peretti, Paloma Picasso, Jean Schlumberger and architect Frank Gehry; engagement jewelry; watches; and sterling silver jewelry.

The jeweler announced that it will open its third store in Las Vegas in late 2009. The new 10,000-square-foot two-level store will be located in The Crystals at CityCenter, currently under development along the Las Vegas Strip. The multibillion-dollar retail and entertainment development, a joint venture between MGM Mirage and Dubai World, is the largest single multiuse project under construction in the country, according to Tiffany. The jeweler already operates Las Vegas stores in the Shops at Via Bellagio and The Forum Shops at Caesars.

In addition, Tiffany plans to open a boutique in Dublin, Ireland, in fall 2008. The approximately 400-square-foot boutique will be situated on the newly refurbished ground floor of Brown Thomas on Grafton Street, the city’s main shopping thoroughfare.

Star Brillian Opens Mumbai Store

Star Brillian opened its first showroom in the Atria mall in Mumbai, India, under the brand name Sakshi, company director Mehul Shah said in an email. The store offers gold jewelry and diamonds, as well as gold coins and silver items provided by the government’s Metals & Minerals Trading Corporation. Shah added that the India-based diamond and jewelry export company plans to open more Sakshi stores in the future.

Hang Fung’s Retail Expansion Continues

Hang Fung Gold Technology Limited, a Hong Kong-based jeweler, is continuing its expansion in mainland China. Since 2007, the chain has added 39 stores toward its goal of 300 by 2009. The company has a long-term target of 1,000 locations in 100 mainland cities within five to eight years. Hang Fung reported a net profit of $12.8 million (HKD 100 million) in the first half of the year ended in September, up 91 percent from $6.7 million (HKD 52 million) the previous year.

Asian Star Opens First Store

Asian Star entered the retail world with the launch of Shagun Jewels, its first jewelry store, in Hyderabad, India. The store offers a selection of over 2,500 diamond and gold jewelry designs priced from about $240 to $12,000 (INR 10,000 to INR 500,000). Spokespersons stated that the company plans to expand the brand in select cities across India, where this Diamond Trading Company (DTC) sightholder is based.

Overstock.com Contracts with E4X

Overstock.com, Inc., known for offering closeout jewelry and other items, is contracting with E4X, Inc., to offer merchandise to consumers outside the U.S. E4X’s FiftyOne Global eCommerce program simplifies international ecommerce by showing merchandise, pricing and delivery options for the shopper’s home country. For the e-tailer, international sales will be configured to resemble any domestic sale. FiftyOne Global addresses all aspects of an international transaction, including local country merchandising, multicurrency payments, global logistics and post-sale customer support. Niche jeweler Love and Pride also signed on with E4X to reach 34 countries, while Crayola and clothing brand Fit Couture have already rolled out FiftyOne Global. The U.S. dollar provides a significant pricing advantage for international online shoppers, often as much as 40 percent, even when shipping, taxes and duties are included, according to E4X.

eDiamondselect Partners with CBG

Diamond software solutions provider eDiamondselect™ partnered with Continental Buying Group (CBG), one of the largest jewelry buying groups in the country. CBG endorsed eDiamondselect to its 97 retail members, who represent more than 300 retail jewelry outlets and 120 authorized vendors. The software provider will offer special pricing for CBG retailers and has set up authorized vendors, including Leo Schachter, Rosy Blue, Waldman, Weldiam, Yerushalmi, Amden and Simply Diamonds. The company’s Series 4.0 WebEmbed software enables brick-and-mortar stores to offer the same inventories as online retailers, giving customers access to the store’s loose diamond inventory via a touchscreen or the jeweler’s PC for a flat annual fee. The offerings are prepriced to reflect the retailer’s specific markup and available within 24 hours. eDiamondselect has also forged deals with Ben Bridge, Lee Michaels, Devon’s, M.J. Christensen and R.F. Moeller.

Italy Expects Drop in Jewelry Exports

Italy’s jewelry exports fell in 2007 and the downward trend is expected to continue this year, Stefano de Pascale, director of Federorafi, the Italian goldsmiths’ body, told Reuters. De Pascale reported that foreign sales of export-focused Italian jewelry fell 6.2 percent by volume, but rose 4.1 percent in value. Italian jewelry export volume was forecasted to fall between 2.5 and 5 percent in 2007, according to Reuters. De Pascale added that the decline continued in the first quarter of 2008, when jewelry exports from Veneto, one of Italy’s three main jewelry manufacturing regions, fell 4.7 percent in value.

House of Taylor in Default

House of Taylor Jewelry received a “Notice of Default; Reservation of Rights” letter from New Stream Secured Capital, the brand’s senior lender. New Stream informed House of Taylor that the letter was the result of the company’s continued failure to repay $3,947,506, the outstanding amount of its revolving credit loan, which exceeds its borrowing availability. New Stream also stated that House of Taylor failed to maintain minimum EBITDA — earnings before interest, taxes, depreciation and amortization — between December 31, 2007, and March 31, 2008, violating the loan agreement.

The NASDAQ Stock Market announced that it will complete its delisting of House of Taylor Jewelry Inc.’s common stock, after shares were suspended on April 24, 2008, for the firm’s failure to pay listing fees. House of Taylor Jewelry previously stated that it received a notice from NASDAQ on October 29, 2007, indicating that the company was not in compliance with the minimum bid price requirement of $1.00 per share or more for a minimum of ten consecutive business days. The firm had until April 28, 2008, to regain compliance, but did not meet this requirement.

Article from the Rapaport Magazine - June 2008. To subscribe click here.