LJ International Revenues Up 36%

LJ International Inc. on Tuesday reported a 36 percent year-over-year increase in revenues for the third quarter ended September 30. Sales and income growth reflected an 83 percent rise in sales at LJI's ENZO retail chain of jewelry stores in China.

The Hong Kong based company makes gold, platinum, and sterling silver jewelry set with diamonds and precious and semi-precious stones at its plant in Shenzhen, China. It markets its jewelry primarily under the Lorenzo brand name to retailers in Europe and North America. It also sells jewelry through fine jewelers, discount chains, department stores, television shopping channels, and in about 100 of its own ENZO retail stores in China, Hong Kong, and Macau.

The company said it expects fourth quarter 2010 sales for ENZO to increase 40 percent year-over-year, offsetting an approximately 15 percent decrease in wholesale revenues.

"Today's results clearly demonstrate how our retail-based growth strategy is succeeding as planned," said Yu Chuan Yih, LJI's chairman and CEO. "Our ENZO division is the primary driver of both sales growth and margin improvements at all levels, from gross to net profit. Retail sales also are rising not just from the opening of new stores but from significantly higher sales on per-store basis. With new financing in place to fund at least 60 new ENZO stores in 2011, LJI is on track to take advantage of continuing economic growth in China while holding its own as a leading jewelry wholesaler in slower-growing global markets."

LJI's company-wide revenues for the third quarter rose 36 percent year-over-year to $35.7 million. Retail revenues were up 83 percent to $21.1 million. Same store retail sales rose 13 percent for the period. Wholesale revenues were down less than 1 percent to $14.6 million.

Rising retail revenues reflected expanded store count (up to 124 at the end of the third quarter from 92 a year earlier) and growing consumer interest in ENZO jewelry lines coupled with the continued rise of disposable income in China's expanding economy.

As in past quarters, gross margins for retail revenues were substantially higher than wholesale. Gross retail profit in the third quarter of 2010 was $10.6 million, or 51 percent of retail revenues. Gross wholesale profit was $3.4 million, or 23 percent of wholesale revenues. Overall gross profit was $14 million, or 39 percent of revenues.

LJI's operating income for the third quarter of 2010 was $3.7 million, or 10 percent of revenues, up 188 percent from $1.3 million, or 5 percent of revenues, a year earlier. The improvement was due both to the sharp rise in higher-margin retail sales along with effective controls on sales, general and administrative expenses, the company said.

Retail operating income was $3.1 million, or 15 percent of retail revenues, up from $1 million, or 8 percent of retail revenues, a year earlier. Wholesale operating income was $1 million, or 7 percent of wholesale revenues, compared to $$500,000, or 4 percent of wholesale revenue, in the third quarter of 2009.

The internet's Impact on the ‘Makers’ and ‘Takers’ in the Global Jewelry Industry

Laura Stanley of Stanley Jewelers Gemologist, Little Rock, Ark., hosted Master Diamond Cutter Mike Botha of Embee Diamonds to teach consumers about the diamond cutting process. The event was televised on a local news station.

This is the first in a series of articles by Chris Benham, co-founder and director of Inspired Jewellery Ltd., Wellington, New Zealand, a global creative studio for specialist jewelry design.  

The internet has had a hugely disruptive effect on the jewelry industry in recent years, as it has with most industries. Our rapidly shrinking world has led to an increase in transparency, access and an explosion of product choice. The side effect of this is that many traditional jewelry businesses throughout the value chain have seen their margins erode.

A lot of traditional "taker" businesses that, in the past, have had to accept the prices of their suppliers, and who have historically been able to set their own prices with little challenge from their end customers, now cannot. These taker businesses range from local diamond wholesalers to Mom-and-Pop jewelry retailers that have been around for generations. Customers can quickly jump on the internet to compare prices, so these businesses have had to find ways to survive by adding value to their end customers. 

The companies that have thrived in recent years are the "makers" - the ones that have taken tradition and redefined it. There are many great examples of companies that have built brands that focus on design, craftsmanship, great personal service and trust. The byproduct of doing the tangibles well are the intangibles that form the basis of their innovation and ultimately the intellectual property that other companies struggle to understand or replicate.

Customer picking up his purchase at The Village Goldsmith, Wellington NZ. 

The internet breeds monopolies and no more so than in the jewelry industry. The top tier diamond companies are becoming more and more dominant by the day, helped by natural economies of scale and their purchasing power. Much of the reason for this is that ‘Mom and Pop’ retailers from the US to New Zealand have the same access to diamond inventory lists as do the major online global jewelry retailers. Consumers are able to access diamond pricing information and descriptions instantaneously, make comparisons and choices at the touch of a button, and this has led to the erosion of traditional margins for retailers. Diamond companies’ margins are also getting tighter as they fight to remain competitive, ensuring that they need to innovate to stay relevant.

Why is this good for the end customer? Well, it forces companies throughout the whole value chain in the jewelry industry to genuinely look at clever ways to create better products and experiences for their customers.

A master jeweler at Inspired Jewellery sets a diamond on a ring. 

Retailers big and small that continue to focus their efforts around the needs of their customers are seeing strong growth. In a recent report big retailers like Nordstrom attribute customer service as central to their strategy and recent growth. They are using different store types and brands to appeal to different customer profiles and age groups. They’ve recognized the need to connect with the younger generation as they will be tomorrow’s customer and are using an omni-channel strategy to support this. Burberry is another luxury brand that is going to great lengths to connect the retail store experience with the online experience.

Recent research conducted by Bain and Co. stated that when consumers were selecting which jewelry store to buy from in Western markets they valued quality service over all other factors. 

A local US retailer that has recognized this is Stanley Jewelers Gemologist in Little Rock Arkansas. Vice President Laura Stanley recently hosted Master Diamond Cutter Mike Botha of Embee Diamonds (see top photo). The aim of the “Southern Stars: Meet the Cutter” tour was to teach consumers about the diamond cutting process so that they are able to make more informed decisions. Laura Stanley said that the theme of the event was to get to know your jeweler better. The event provided Stanley’s customers with an authentic experience of what goes into cutting a diamond - a craft that is not often showcased to consumers. 

If “price makers” want to retain that position they must continually innovate and provide more intangibles for their customers to prove that the price they set is worth paying.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes website.

Signet Jewelers CEO Mike Barnes Resigns; Replaced by Mark Light

Mike Barnes

Signet Jewelers Ltd. said Tuesday that Michael Barnes will resign from his position as chief executive officer and from Signet's board of directors, effective October 31, in order to be closer to his family in Dallas.

Mark Light, Signet's president and chief operating officer, has been named to succeed Barnes as CEO and take a seat on the board.

Signet said it is also reaffirming its financial guidance initiated in its second quarter earnings release on August 28.

Barnes joined Signet in December 2010 and became its CEO in January 2011, replacing Terry Burman, the company’s longtime CEO. Most recently he oversaw the $1.46 billion acquisition of Dallas-based Zale Corp., its largest US competitor, in May, making Signet the largest specialty jewelry retailer in the US, UK and Canada with approximately 3,500 retail outlets.

“Mike has been the leader of the Signet executive management team during a period of outstanding transformation and growth,” said Todd Stitzer, Signet chairman. “Since he joined Signet in 2010, Mike has been an instrumental part of Signet's success. He has played a critical role in Signet's recent acquisition of Zale Corp. and its continuing integration. He has also led the development of Signet's Vision 2020 Initiative for the future. We understand and respect his personal desire to relocate nearer to his family and pursue opportunities closer to his home in Dallas at this time.”

Signet is based in Bermuda and is listed on the NYSE. Its US subsidiary, Sterling Jewelers, with more than 1,400 stores in 50 states, is headquartered in Akron, Ohio. The company, in an SEC filing Tuesday, said it will pay Barnes accrued but unpaid benefits or obligations, his base salary for 12 additional months and an annual bonus at the end of the fiscal year.


Light has been with Signet for more than 30 years, with primary responsibility for the Sterling division, by far Sterling’s largest division, until the Zale Corp. acquisition.

“We are delighted to announce Mark’s promotion to chief executive officer of Signet,” Stitzer said. “Mark is an experienced, strategic leader who has been deeply involved in the company's Vision 2020 Strategy, the Zale acquisition and its ongoing integration. In addition he has a meticulous approach to operational details, and has been the main architect of our Sterling division's consistently profitable growth and has played a key role in defining and executing Signet's growth strategy. He has also been an advisor to our UK Managing Director since 2013 and became formally responsible for that business in mid-2014.”

Signet's Sterling division operates primarily under the brands of Kay Jewelers and Jared The Galleria Of Jewelry. Signet's UK division operates approximately 500 stores primarily under the name brands of H.Samuel and Ernest Jones. Signet's Zale division operates more than 1,600 locations in the US and Canada primarily under the name brands of Zales, People's, and Piercing Pagoda. The company also has online operations at www.kay.com, www.jared.com, www.hsamuel.co.uk, www.ernestjones.co.uk, www.zales.com, and www.peoplesjewellers.com.

Tiffany & Co. CEO Michael Kowalski to Retire; Frederic Cumenal Named as Successor

Michael J. Kowalski

Longtime Tiffany & Co. CEO, Michael J. Kowalski, will retire effective March 31, 2015, the luxury jewelry retailer announced Monday.Frederic Cumenal, Tiffany president, has been tapped to succeed him.

Kowalski, 62, joined Tiffany in 1983, became its in 1999 and assumed the role of chairman of the board in 2003. He will continue to serve on the board in the role of non-executive chairman following his retirement. 

“I am immensely satisfied by what we have accomplished at Tiffany over the past 30 years, and I am confident that the company is superbly positioned for the future,” Kowalski said in a statement. “Frederic Cumenal is ideally suited to succeed me as chief executive officer, and we will continue to work closely together to ensure a seamless transition.”

Cumenal, 54, was named Tiffany’s president in September 2013, with responsibilities for worldwide sales and distribution as well as design, merchandising and marketing functions. At that time he was also appointed to a newly created seat on the Tiffany’s board. Cumenal initially joined Tiffany in March 2011 as an executive vice president with responsibilities for sales and distribution. He will succeed Kowalski on April 1, 2015.

Frederic Cumenal

“This is an extraordinary company with a fantastic heritage and an exciting future,” Cumenal said. “I am deeply honored to be selected as its leader and look forward enthusiastically to capitalizing on the many opportunities ahead.”

Prior to joining Tiffany, Cumenal held senior leadership positions for 15 years in LVMH Group’s wine and spirits businesses, most recently as president and chief executive officer of Moët & Chandon, S.A. He previously served as CEO of Domaine Chandon, and was managing director of Moët Hennessy Europe.

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Ivanka Trump Fine Jewelry to relocate its N.Y. Boutique

Ivanka Trump Fine Jewelry said Monday that is plans to move its New York retail business from its current Madison Avenue location to a substantially larger 3,100-square-foot flagship boutique on 109 Mercer Street in New York’s Soho district.

The brand, which creates and sells jewelry through retail and wholesale channels, opened its 900-square-foot boutique on 62nd Street and Madison Avenue in September 2007. Construction of the company’s new flagship will begin this summer, and it is scheduled to open late fall in time for the holiday season, the company said. The new space will showcase ten distinctive collections of jewelry, an environmentally conscious bridal bar, a VIP room highlighting one-of-a-kind couture pieces and a gallery to showcase future categories such as timepieces.

The new venue will retain the original design concept of the Madison Avenue boutique, the company said. The expanded boutique will allow for more people to attend scheduled events, such as the weekly “Champagne Saturdays,” and also allow Ivanka Trump and the company to host other co-branded events, such as the United Nations Foundation’s Girl Up campaign, in which she is a founding member.

The company said it will maintain its midtown boutique at the Trump Tower.

Another Wave of Innovation From Outside the Jewelry Industry with Consumer-Friendly Websites

The jewelry industry has an image problem. Younger consumers find the jewelry store environment intimidating. More importantly, these same consumers, who spend much of their time with digital media, find websites from retailers, designers and manufacturers equally imposing.

Innovation online has largely come from outside the industry, such as website Blue Nile. However, the Blue Nile model with its focus on jewelry and diamonds as a commodity seems to be losing ground as the digital landscape has again dramatically changed with the wide acceptance of social and mobile media.

To address this new reality, two websites (again founded by people outside the industry) have launched that are working to bridge the gap among e-commerce, social media and bricks-and-mortar retail: Adornia and Stone & Strand.

These well-branded projects have a lot in common. They are focused on delivering a quality experience by attempting to build a community of enthusiastic and engaged jewelry buyers. They both are using a curated approach to their business models. The founders of both sites are products of the Wharton School of the University of Pennsylvania. In addition, these founders also have a wealth of professional and personal experiences that have enhanced the vision of their projects.

Adornia co-founders Becca Aronson and Moran Amir met at Wharton and didn’t wait to leave the business school before starting their own company. Both are scheduled to graduate in May but launched Adornia in September 2012 out of their apartments. They plan to return to New York to set up a permanent home for their business. Aronson was the former Lucky accessories editor and Amir handled retail operations for Catherine Malandrino and Diesel. Their experiences are complementary with Aronson the creative person while Aronson handles much of the business. “She’s Photoshop and I’m PowerPoint,” Amir says.

The website sells affordable fine fashion jewelry at a price range from approximately $75 to $2,300. Their customer is very specific: fashion-forward, professional, urban women from the ages of 25 to 45 who have a strong sense of personal style. This site’s main customers are women who buy their own jewelry (the self-purchasing woman).

Aronson and Amir purchase all of the jewelry themselves. In addition to curating the pieces, they organize them in separate collections with names like “Heavy Metal,” “Deco After Dark” and “Darkest Jungle.” The idea is to make personal jewelry shopping easier for women who know their own style. While the site is geared for women, they say that this presentation also makes it easier for men and friends to purchase gifts. They also discuss fashion trends through their blog, “The United States of Adornia.”

The co-founders take their brand to the people, holding trunk shows from San Francisco to Shanghai, China. One of their plans is to do a cross country bus tour.

Meanwhile, Wharton grad Nadine McCarthy Kahane launched her website, Stone & Strand, April 18. A former strategy consultant, she has traveled extensively for work and pleasure and has lived in Singapore, London and Buenos Aires before settling in New York.

Instead of curating the jewelry collection like Adornia, Kahane is curating a group of jewelry designers. She opened the site with a group of 24 designers. The result is a broad jewelry collection that ranges in material from wood to high-karat gold and in price from $115 to well over $20,000. For now all of the designers reside in the U.S. (although several are from other countries) but Kahane said she will expand to include designers from around the world.

This is a site geared toward a clientele who love the search for original adornment almost as much as they love wearing the pieces. “People want things they can fall in love with,” Kahane says. It’s really nice to be able to tap into that passion.”

On this website, the focus is totally on designers. Their works and their stories are presented front and center. They provide access to designers’ studios through personal meetings and special events.

For Kahane the inspiration to start this site was personal. First, she discussed the difficulties of learning about jewelry on her own (such as style, materials and cost). Then she said she has two friends who are jewelry designers who were having difficulty finding an online home for their work.

“We in business are trained to spot opportunities and we feel jewelry is going through this transformation,” she said. “It’s been so conservative. A lot of the designers don’t sell online or they sell a very small portion of their collection online. We do see things changing quickly. We see people buying off Instagram these days. It’s all about access.”

Another thing both sites share is free shipping to U.S. and customer-friendly return policies. Of course both brands appear on all of the standard social media platforms.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

Ivanka Trump Moves Jewelry Boutique Downtown

The Ivanka Trump Fine Jewelry boutique.

Ivanka Trump Fine Jewelry has been expanding in a number of ways during the past year. The brand has released fine jewelry collections aimed at different markets. In addition, Trump herself has been traveling the world promoting the company’s collections to new audiences. To coincide with this expansion the brand recently moved from its “jewel box”-sized space on Madison Avenue to a 2,400 square-foot, bi-level boutique in SoHo giving its uptown chic a downtown vibe.

One of the standalone jewelry display cases.

The New York flagship store at 109 Mercer St. that opened in late November has many of the same luxurious and feminine qualities of the prior store along with dedicated spaces for a lounge, bridal jewelry and special events. Designed by NY3Design, the space uses art deco and classical elements in black and white (the colors of the brand) along with large touches of Ivanka Trump’s signature coral, and light brown and cream tones. And, of course, there are plenty of mirrors.

The VIP room and lounge.

The store houses nearly all of the Ivanka Trump Fine Jewelry collections along with accessories from some of her other product lines. Entering the long narrow space, the first items shown are designed to be accessible to younger jewelry lovers, such as those who live in the neighborhood. Strolling along a custom-designed white carpet with black patterns (created by ABC Carpet & Home), the space narrows a bit where there’s a full-length mirror on the left and a mirrored wall on the right with shelving and spaces that contains more upscale jewelry designs along with Ivanka Trump handbags and other accessories. In between is an updated version of standalone antique display case, using a curved solid white frame topped with a separate glass case. These standalone displays are located throughout the store.

The stairway that leads to the bridal salon.

As you continue the space opens again to a small lounge area. The area is a place where men can wait while their significant other is shopping. The folks at Ivanka Trump swear that men are welcome but this is a store designed for women (even the lounge area). Beside the lounge there’s a separate “VIP” room for private consultations. This area contains Trump’s new Downtown jewelry collection, created specifically for the new store. 

The view of the bridal salon from above.

Past the open space a large Schonbek chandelier hangs overhead. Beneath it is the lower level, which serves as the store’s dedicated bridal salon. You descend into the space on a stairwell. The bridal area contains individual display cases showing Trump’s wedding bands along with ethically sourced engagement rings and bridal jewelry. Comfortable sofas, chairs and tables, and even a makeup table, giving a touch of home, are located throughout the area. This space is large enough for bridal parties and other special events, including the “Champaign Saturdays” that were popular at the Madison Avenue store.

The furnishings inside the bridal salon.

What’s next for the jewelry brand? A move to China? Stay tuned.

Look for ‘Crazy Warren’ Buffett Selling Jewelry at Borsheims

Susan Jacques, Borsheims president and CEO, shows Warren Buffett the special shareholder price of piece of jewelry during last year’s Berkshire Hathaway shareholders weekend.

Borsheims jewelry store is one of the most popular stops for Berkshire Hathaway investors during the company’s annual weekend-long shareholders meeting. The retailer should expect to see greater crowds this year as Warren Buffet will once again be making the rounds as a jewelry salesman for the weekend.

Buffett made the announcement in his annual letter to Berkshire Hathaway shareholders, released Saturday. It will be the second consecutive year that the “Sage of Omaha” will be selling jewelry for the shareholders weekend—which attracts more than 30,000 Berkshire Hathaway shareholders, media members and other guests. Borsheims is a subsidiary of Berkshire Hathaway.

“On Sunday (May 6, 2012) around 2 p.m., I will be clerking at Borsheims, desperate to beat my sales figure from last year,” Buffett wrote. “So come take advantage of me. Ask me for my ‘Crazy Warren’ price.” 

“We are thrilled to have Mr. Buffett back among our sales staff. He set records last year in his brief stint behind the counter and we expect a longer stay from Mr. Buffett this year,” Borsheims wrote on its blog.

The jeweler was founded in 1870 and has been a subsidiary of Berkshire Hathaway since 1989. The store covers more than 62,500 square feet after its 2006 remodel, and maintains an inventory that includes more than 100,000 pieces. It also has a very large catalog and website business.

Buffett, if course, is the primary shareholder, chairman and CEO of Berkshire Hathaway and is widely regarded as one the most successful investors in the world.