TradeWire® Weekly Email




  Rapaport TradeWire  
Rapaport TradeWire
RAPAPORT NEWS SERVICE | Nov. 26, 2014   www.rapaport.com | news@rapaport.com
 
 
Industry Retail EconWatch Mining Stats India
Facebook Twitter RSS
 
 
Rapaport Weekly Market Comment Nov. 26, 2014


Inventory increasing, liquidity decreasing with tough rough pricing. Polished prices under pressure after relatively weak Indian Diwali and China Golden Week. All eyes and hopes are on the U.S. retail market. Chow Tai Fook 1H revenue -22% to $2.9B, profit -23% to $353M. Luk Fook 1H revenue -25% to $973M, profit -16% to $104M. Signet 3Q same store sales +4%, loss of $1.3M vs. profit of $34M. Tiffany 3Q revenue +5% to $960M, profit -60% to $38M. Sotheby’s NY sells pear, 9.75ct., fancy vivid blue, VVS2 diamond for record $32.6M ($3.3M/ct.). India’s Oct. polished exports -15% to $2.2B. The Rapaport Group wishes all our friends a happy Thanksgiving and a successful holiday season. 


RapNet Data: Nov. 26
Diamonds   1,538,215
Value $8,168,442,036
Carats   1,523,522
Average Discount -27.99%

www.rapnet.com

RAPI Chart

Get Current Price List | Subscribe to Rapaport | Join RapNet

 
RAPAPORT ANNOUNCEMENTS
Rapaport
RapNet App

New features added include member directory and tradescreen!

Download RapNet's app for the iPhone.

December
1-4
Mon-Thu
Rapaport
Rapaport Melee Auction

New York
 
View Details.


December
5-10
Fri-Wed
Rapaport
Rapaport  Single Stone Auction

New York & Israel

www.rapaportauctions.com



  QUOTE OF THE WEEK
  In the short time period since owning Zale, we have been able to implement select initiatives to further the Zale Christmas business. We remain confident in our ability to meet our goal of $150 million to $175 million in cumulative 3-year synergies from January-end 2015 to January-end 2018.

Mark Light | Signet

Careers@Rapaport  
 

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp and Mumbai. View jobs now.




INDUSTRY  
 
ALROSA Reports 3Q Loss

ALROSA reported a loss of $223 million (RUB 10.3 billion) during the third quarter that ended on September 30, primarily due to foreign exchange losses. ALROSA posted a profit of $180 million the previous year. An economic slump and Western sanctions imposed on Russia in response to the Ukraine crisis have hammered the ruble by 27% against the dollar since January. Revenue rose 8% year on year to $909 million, while the average price of its gem-quality diamonds fell 9% from the previous quarter to $182 per carat. The company noted that a change in the product mix offered was responsible for the average price difference even as market prices rose 3%. 

ALROSA previously reported that production fell 2% to 9.737 million carats in the third quarter. Production during the first nine months of the year dropped 5% to 25.655 million carats, although the company remained on track to meet a target of 36 million carats this year. ALROSA’s revenue increased 21% to $3.17 billion, while profit fell 44% to $276 million.
 


 
U.S. Jewelry & Watch Sales Drop

U.S. jewelry and watch sales combined fell 0.6% year on year to $5.461 billion in October, according to preliminary estimates by Rapaport News. While the data is subject to several revisions, it currently marks the first monthly decline since April 2012. Jewelry sales from all retail channels fell 0.5% year on year to $4.806 billion, while watch sales declined 1.5% to $655 million during the month, according to Rapaport News. Growth began to cool in September when jewelry and watch sales experienced just a 1% increase to $5.415 billion, and by a separate measure, specialty jewelry store sales rose by only 1.2% that month to $2.2 billion. Still, jewelry and watch sales have risen 2.2% year on year to $56.5 billion for the first 10 months of 2014.



 
Swiss Watch Exports +5%

Swiss watch exports rose 5.2% year on year to $2.34 billion (CHF 2.27 billion) in October, representing a record level for a month, according to the Federation of Swiss Watches. Exports by volume rose 4.5% to 2.881 million units. Growth was driven by the lower and higher price segments. Exports of watches priced at less than $206 increased 7%, while exports of timepieces priced above $3,092 rose 8%. Exports of watches for the mid-market segment priced at between $206 and $3,092 declined by 2.6%. During the first 10 months of the year, Swiss watch exports increased 3.1% to $19 billion.



RETAIL & WHOLESALE  
 
Chow Tai Fook's 1H Profit -23%

Chow Tai Fook reported that revenue fell 22% year on year to $2.88 billion (HKD 29.32 billion) in the six months that ended on September 30, as gold sales failed to keep pace with last year’s levels. Profit slumped 23% to $352.8 million. The jewelry market downturn during the first half of fiscal 2015 came as no surprise to the company, given the relatively slow economy in both Hong Kong and Mainland China. Sales of gem-set jewelry grew 25% to $1.07 billion, while gold product sales slid 41% to $1.87 billion. Sales of platinum and karat gold products fell 5% to $609.4 million, while watch sales increased 18% to $229.3 million.



 
Signet Records 3Q Loss

Signet Jewellers Ltd. reported that revenue rose 52.7% year on year to $1.18 billion for the third quarter that ended on November 1, based on a condensed consolidated basis that included the acquisition of Zale. Comparable-store sales across the group rose 4.2%. Revenue from the company's various online channels jumped 96.5% to $44.8 million. Cost of sales increased 56.4% to $832 million. The group recorded a loss of $1.3 million or 2 cents per share, down from profit of $33.6 million, which was largely blamed on a Zale division loss of $13.2 million and incremental interest expense of $10.6 million related to the Zale acquisition. Gross margin fell to 29.4% of sales compared with 31% one year ago, with the decrease being attributable to Zale.

Revenue improvement was driven by fashion jewelry and bridal at brands operated by Sterling, while the strongest segment at Zale was fashion diamonds. In the U.K., there as good demand for diamond jewelry and watches. Cash and cash equivalents were unchanged at $87.6 million, however, the value of inventory jumped 62.6% to $2.7 billion. Signet entered into a rough diamond supply contract with De Beers to advance its strategic diamond sourcing efforts. Signet already owns a diamond cutting factory in Botswana where sights are held.



 
Tiffany's 3Q Profit -60%

Tiffany & Co. reported that revenue rose 5.3% year on year to $959.6 million in the third quarter that ended on October 31. Same-store sales rose 4%. The jeweler reduced cost of sales by 0.8% to $388.7 million, but it also recorded a charge of $93.8 million due to early repayment of debt. Tiffany & Co.'s profit fell 59.6% to $38.3 million or 30 cents per share. By region, sales rose 10% across the Americas to $459 million during the quarter, with comparable-store sales rising by 11%. Across the Asia-Pacific, Tiffany & Co. recorded a 2% increase in sales at $243 million, but same-store sales fell 3%. Sales in Japan dropped 12% to $113 million and comparable-store sales fell 6%. In Europe, revenue jumped 9% to $114 million and same-store sales improved 2%.

The value of inventory as of October 31 rose 10% year on year to $2.6 billion. Gross margin rose to 59.5% from 57% one year ago. Cash and cash equivalents and short-term investments dropped to $383 million, compared with $521 million one year ago. Tiffany & Co. maintained its guidance for the fiscal year, which ends on January 31, and anticipates earnings per share of between $4.20 and $4.30, excluding the charge related to repayment of debt. However, the company softened revenue growth projections just a touch with worldwide sales increasing by a mid- to high-single-digit percentage rather than a high-single-digit projection that was forecast earlier.



 
Luk Fook's 1H Profit -17%

Luk Fook Holdings Company Ltd. reported that revenue plunged 25.1% year on year to $973 million (HKD 7.542 billion) in the first half that ended on September 30. Same-store sales fell 41%, but comparisons were difficult due to a "gold rush" in 2013 that drove comparable-store sales up 64.4% in the first half. Same-store sales for gold and platinum products declined 50.1% this year, while they fell 12.9% for gem-set jewelry products. Profit attributable to equity shareholders dropped 16.6% to $104 million. Still, the board was eager to declare an interim dividend of 7 cents (HKD 0.55) per ordinary share, down from 8 cents (HKD 0.63) one year earlier. Revenue from the group's retail business fell 31.7% year on year to $761 million, however, sales from the wholesale business increased 23.4% to $176 million. Licensing revenue fell 13.1% to $36 million.



 
Movado's 3Q Profit -4%

The Movado Group reported that sales fell 0.6% year on year to $188.6 million in the third quarter that ended on October 31. Costs of sales were reduced slightly, by 0.3%, to $88.7 million. Gross margin fell to 53% compared with 53.4% one year ago. Profit slipped 4.3% to $22.4 million. Cash and cash equivalents were unchanged at $157.9 million, but the value of inventory rose 0.7% to $182.7 million. Movado anticipates that sales during the fourth quarter, which includes the Christmas season, will total between $132 million and $137 million, while earnings per diluted share are forecast in the range of 18 cents and 23 cents.



 
Blue Diamond Sets Records

A 9.75-carat, VVS2, fancy vivid blue, pear-shaped diamond pendant from the collection of Mrs. Paul Mellon sold for $32,645,000 or $3,348,205 per carat, setting a new world auction record total price for any blue diamond and a new world auction record price-per-carat for any diamond. The diamond had a presale estimate of $10 million to $15 million.

A saleroom filled with onlookers watched on tenterhooks as clients placed their bids on the phone. Rivalry between seven bidders was calm but brisk and the field was eventually narrowed down to two bidders in a duel that lasted for about 20 minutes. A round of applause broke out in the room as the bidding ended when a private collector in Hong Kong prevailed and named the new acquisition The Zoe Diamond. This particular diamond is notable for the purity of the blue with no modifying colors, and its high clarity as many blue diamonds contain graining or other imperfections that develop as the crystals form. The evening session of the sale totaled $42.1 million for 42 lots, of which 41 sold.



 
U.S. Consumers Tighten Spending Intentions Slightly

U.S. adults are planning to spend $720 on gifts for the Christmas season, according to Gallup's latest survey, representing a 3% increase from 2013, but a decrease of about 6% compared with 2012 and 2011. Forty-six percent of those surveyed expect to spend $500 or more, 39% plan to spend $499 or less, 9% do not celebrate Christmas and 6% were unsure how much they will spend, according to the survey. Gallup observed that spending intentions have softened since October, when U.S. adults estimated their gift budgets at $781, which the firm likened to the "cold feet" syndrome. Nonetheless, Gallup estimates a broad retail spending increase of between 2.2% and 3.5% for the November and December holiday period.



 
Palladium Equity Invests in Daniel's

Private equity firm Palladium Equity Partners made a majority investment in Daniel's Jewelers in California, without disclosing financial details. The retailer was founded in 1948 and the family-run business has since grown to 73 locations across Southern California, the Central Valley and the Central Coast. Luis Zaldivar, a managing director of Palladium Equity, said that Daniel's is ripe for new initiatives in support of growth, including opening new locations and pursuing strategic acquisitions, both inside and outside of California.



 
Bulova Unveils 24-Karat Watch

Bulova Corporation introduced a watch with a case made from 24-karat gold as a special edition timepiece from the company's Bulova Accu•Swiss brand. It is the first edition in the company's Joseph Bulova Collection and it was recognized by WatchPro as the 2014 "Innovative Watch of the Year." The watch was conceptualized by Bulova's president, Gregory Thumm, and relies on a proprietary process that enabled Bulova to harden 999.9 pure 24-karat gold, while maintaining exacting quality standards for finish and fit, and ensuring water resistance to 30 meters below the surface, according to the brand.



 
Citizen Opens Flagship Store

Citizen Watch Company of America held the grand opening of its flagship store in Times Square at 1500 Broadway, marking the first Citizen Watch global retail concept store in North America. The 1,300-square-foot boutique features a full range of watches from Citizen Eco-Drive, DRIVE from Citizen Eco-Drive, and the Citizen Signature Collections. The store was designed to appeal to both amateur and serious watch enthusiasts and serve as a showcase for the Citizen Watch brand with interactive and hands-on displays and exclusive offerings.
 


 
David Yurman Boutique Opens in SoHo

David Yurman unveiled its second New York City retail location in the heart of SoHo at 114 Prince Street. The 2,000-square-foot store was conceived by the Yurmans in partnership with their in-house design team, in what was described as an expression of casual luxury, and in appreciation of the craft and legacy of artists in SoHo’s 1970s community. The boutique is located in the SoHo-Cast Iron Historic District in a late 19th century loft building that is known for its Richard Haas trompe l'œil mural. The classical lines of the cast-iron façade frame the sculpted forms of David Yurman’s collections.



 
U.S. Consumer Confidence Rises

U.S. consumer confidence was much stronger in November than was the case one year ago, according to The Conference Board Consumer Confidence Index®, which registered 88.7 points (1985=100) compared with only 70.4 points in November 2013. In addition, the Present Situation Index jumped to 91.3 points from 72 points and the Expectations Index improved to 87 points compared with 69.3 points one year ago. Even with the year-on-year improvement, The Conference Board observed that all three measures were sharply lower from readings in October.

Lynn Franco, the director of economic indicators at The Conference Board, opined that consumer confidence retreated in the past month due to reduced optimism in the short-term outlook and the continued poor performance of the U.S. job market.



 
Gemfields Recovers Large Ruby

Gemfields recovered a 40.23-carat rough ruby at its Montepuez deposit in Mozambique. Given the significance of this stone, Gemfields committed to follow the ruby from mine to market and, ultimately, to a new owner. The gem was appraised in advance of Gemfields’ December ruby auction in Singapore by the Gübelin Gem Lab in Switzerland.

Daniel Nyfeler, the managing director of Gubelin, said, “Although difficult to judge in the rough state, the transparency and color of the crystal indicate an important gemstone might be cut from this piece of rough. We are looking forward to following the development of this remarkable rough from its current state to a cut gem.”



MINING  
 
Dominion Diamond's Sales Rise

Dominion Diamond Corporation’s sales jumped 47% year on year to $222.3 million from the sale of 1.154 million carats. Ekati contributed $141.9 million from the sale of 458,000 carats, while production rose 60% to 975,000 carats. Diavik's sales totaled $80.4 million from 696,000 carats, while production fell 19%, with Dominion’s share amounting to 589,000 carats.

Dominion's rough diamond inventory was about $350 million on October 31, including $185 million worth of rough that is available for sale at market value and $15 million worth from samples used in the sorting process. The balance of approximately $165 million represents work in progress. During the first nine months of the fiscal year, Dominion’s sales totaled $675.2 million from 3.5 million carats sold, compared with $522.3 million reported a year earlier.



 
Botswana Diamonds Widens Loss

Botswana Diamonds reported a preliminary loss of $1.61 million (GBP 1.02 million) for the fiscal year that ended on June 30, which was up from a loss of $813,440 one year earlier. Cash and cash equivalents at the close of the year rose to $659,359 compared with $61,997 in 2013. The company reported no revenue during the period.




 
Rockwell Raises $4M

Rockwell Diamonds Inc. completed a $4.1 million offering of two-year unsecured convertible debentures with two insiders, namely Rockwell’s principal shareholder Daboll Consultants Ltd., an affiliate of Diacore, for $3 million and with Mark Bristow, Rockwell’s non-executive chairman, for $1.1 million. The proceeds will be used to finance current and proposed work programs Rockwell's diamond projects and for general working capital purposes.



 
Angola Grants 35-Year License to Lucapa

Lucapa Diamond secured a 35-year mining license for its Lulo concession in Angola, which covers 218 square kilometers under exploration. The company has conducted bulk sampling of kimberlite and alluvial deposits, resulting in the recovery of many large type IIa diamonds and sales of $5.1 million. The project is a joint-venture with Endiama and Rosas & Petalas.



STATS  
 
India

  Oct. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $2,219 -15% $19,199 2%
Polished imports $600 3% $6,210 2%
Net exports $1,619 -20% $12,989 3%
         
Rough imports $1,006 -17% $14,557 14%
Rough exports $107 -37% $1,295 -19%
Net imports $899 -14% $13,263 11%
         
Net diamond account $720 -26% ($274)  


ECONWATCH  
 
Diamond Industry Stock Report

Birks (+13%) continued to lead U.S. shares and Movado (+7%) wasn't far behind. European shares all higher led by Damiani (+18%). India was mixed. Double-digit gains for miners Dominion (+12%), Rockwell (+21%), Firestone (+13%) and Petra (+10%). View the extended stock report.

  Nov. 26 Nov. 20 Chng.  
$1 = Euro 0.799 0.797 0.002  
$1 = Rupee 61.77 61.93 -0.2  
$1 = Israel Shekel 3.87 3.84 0.03  
$1 = Rand 10.96 10.96 0.00  
$1 = Canadian Dollar 1.12 1.13 -0.01  
         
Precious Metals        
Gold $1,197.80 $1,195.10 $2.70  
Platinum $1,226.00 $1,205.00 $21.00  
         
Stock Indexes       Chng.
BSE 28,386.19 28,067.56 318.63 1.1%
Dow Jones 17,827.75 17,717.88 109.87 0.6%
FTSE 6,729.17 6,678.90 50.27 0.8%
Hang Seng 24,111.98 23,349.64 762.34 3.3%
S&P 500 2,072.79 2,052.76 20.03 1.0%
Yahoo! Jewelry 1,239.28 1,200.51 38.77 3.2%




INDIA MARKET REPORT  
 
Polished and Rough Trading Activity

Polished trading is weaker and demand is even softening for dossiers. The Hong Kong authority restricted movement of goods, which resulted in very few Indians attending a show. Liquidity continues be a major concern. Read the full report.





Advertisements

GIA Lab Reports

Rio Tinto Select

Dubai Intl. Jewelry Week

GJEPC


Advertisements
Single Stone and Melee



RapNet App

Diamond Show

RapNet at Dubai

Art of Jewellery

Rapaport Magazine

Swim Jewelry Software

Subscribe to Daily News

Advertisements
 
© Copyright 1978-2014 by Martin Rapaport. All rights reserved. Index®, RapNet®, Rapaport®, PriceGrid™, Diamonds.Net™, and JNS®; are TradeMarks of Martin Rapaport.
While the information presented is from sources we believe reliable, we do not guarantee the accuracy or validity of any information presented by Rapaport or the views expressed by users of our internet service.