Rapaport Weekly Market Comment Oct. 4, 2013

Diamond trading slow with cautious demand for better qualities. IF-VVS weak. Strong price-point demand for commercial SI-I1 qualities. RapNet 1ct. Index (RAPI) flat in Sept. Rough prices under pressure. De Beers drops some prices but boxes still trading at discounts. Indian cutters reducing production by 30-50% as trade organizations discourage purchases of high priced rough. India’s pre-Diwali market demand very weak. Encouraging start to China’s Golden Week with steady gold jewelry demand. ALROSA to list 16% shares in Moscow. India’s Aug. polished exports +36% to $1.9B, rough imports +33% to $682M. Japan’s Aug. polished imports -3% to $65M.

RapNet Data: Oct. 3

Diamonds 1,069,618
Value $6,978,154,942
Carats 1,190,108
Average Discount -28.08%

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RAPAPORT ANNOUNCEMENTS

October
3-9
Thu-Wed
Rapaport Single Stone Auction

New York & Israel

View details.
October
8-17
Tue-Thu

Rapaport Melee Auction 

New York & Dubai

www.rapaportauctions.com
QUOTE OF THE WEEK
The U.S. economy continues to expand, albeit at an unspectacular pace. In order for consumers to turn out this Christmas season, we need to see steady improvements in income and job growth, as well as an agreement from Washington that puts the economic recovery first. Our forecast leaves room for improvement, while at the same time provides a very realistic look at the state of the U.S. consumer and their confidence in our economy.

Jack Kleinhenz | National Retail Federation

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INDUSTRY 	  

Polished Prices Stable

Certified polished diamond prices were stable in September with significantly reduced trading volume. Price sensitive Far East buyers shifted to commercial-qualities, while tight liquidity and weak domestic demand reduced trading in India. High rough diamond prices have disrupted manufacturing activity as polished suppliers focus on depleting existing high levels of inventory.

The RapNet Diamond Index (RAPI™) for 1-carat certified diamonds fell 0.3% in September from August but RAPI for 0.30-carat diamonds rose 0.4%, while 0.50-carat and 3-carat diamonds were both flat. RAPI for 0.30-carat is up 6.4% year on year, but RAPI for 0.50-carat is down 3.8%, 1-carat is lower by 5.5% and 3-carat is off by 3.9%.

Other trends in the month demonstrated steady yet selective trade from the Hong Kong show with a focus on 0.30-carat to 0.50-carat, H and lower, VS-SI goods; tighter bank lending; India’s foreign currency becomes a crisis; rough trading on the secondary market turns quiet and De Beers reduced prices on Indian boxes and raised prices on goods that yield polished in the popular 0.30-carat to 0.50-carat sizes.

Manufacturers to Hold Back Production

India’s influential diamond manufacturing sector pledged to maintain production at levels up to 50% lower than what is typical for the fourth quarter in an attempt to manage the liquidity crisis plaguing the industry. The Gems & Jewellery Export Promotion Council (GJEPC) said manufacturers have already reduced their factory output in the past few months due to the lack of profitability resulting from high rough prices, volatility in the rupee and a slowdown in demand. Banks have limited financing options, too, which is having a severe impact on the diamond business.

The GJEPC met with prominent medium- and large-scale diamond manufacturers to address challenges faced by the cutting and polishing sector. Manufacturers indicated that voluntary reduction in production might continue, and even intensify in 2014, if they do not see a return to sustained profitability in the polishing of rough diamonds. Manufacturers reported a lack of profitability in rough that become polished diamonds in sizes below 0.30 carats.

RETAIL & WHOLESALE 	  

NRF Predicts a Fair Season for Jewelry

The National Retail Federation (NRF) expects U.S. retail sales, excluding automobiles, in the months of November and December to increase 3.9% year on year to $602.1 billion. Growth during the 2012 Christmas season was 3.5% and the 10-year average rate of growth is 3.3%. In terms of popular gift items, electronics lead the way. The NRF observed no discernible trends for the jewelry category at this preliminary stage, however, it anticipates jewelry sales to be at least on par with 2012 if not a little better. During the most recent spending intentions survey, the NRF found that of those shoppers who expected to make major purchases this month, 5% chose jewelry and/or a watch, which is average.

Variables affecting consumer behavior for Christmas season depend mostly upon a robust housing marketing, job security and wage growth, but also an increase in consumer appetite for larger-ticket items. Given that the U.S. government shutdown just began this week, the NRFs flash survey of consumers on October 1 determined about three-quarters of shoppers felt no impact from the closure and do not plan to alter their Christmas-shopping plans. NRFs Shop.org division estimated that online retail sales will grow 13% to 15% for the season. Savvy, cost-conscious consumers are using the Internet for research and bang for their buck, according to the trade group.

The International Council of Shopping Centers (ICSC) anticipates Christmas-retail growth of 3.4%, ShopperTrak predicts growth of 2.4%, AlixPartners forecasts increases of 4.1% to 4.9% and Deloitte expects a 4% to 4.5% sales improvement, but it also includes the month of January.

Affluents Intend to Spend More

American Express Publishing and Harrison Group revealed that 25% of U.S. affluent consumers intend to purchase jewelry as a Christmas gift this year. The percentage was on par with the past two years. The survey of wealthy households that earn at least $100,000 annually concluded that overall holiday spending would increase about 8% year on year, citing improved sentiment across the lower-end of the affluent class.

Neimans Reports a Profit

Neiman Marcus Group LTD Inc., formerly referred to as Neiman Marcus Inc., reported that its revenue rose 11.3% year on year to $1.119 billion for the fourth fiscal quarter that ended on August 3. Comparable-store sales rose 5.4% and earnings jumped to $2.88 million compared with a loss of $11.1 million. Merchandise inventory grew 8.4% to $1.019 billion.

On September 9, Neiman Marcus announced that it would merge with NM Mariposa Holdings Inc. and Mariposa Merger Sub. LLC, both of which are owned by an group consisting of investment funds affiliated with Ares Management LLC and Canada Pension Plan Investment Board. The agreement included a purchase price of $6 billion, a portion of which will be used at the closing to repay all amounts outstanding under the retailers existing senior secured credit facilities.

Amazon Remains Most Favorite

NRFs Stores.org revealed the favorite 50 online U.S. retailers of 2013. A majority of consumers again chose Amazon.com as their favorite shopping destination for a seventh consecutive year, followed by Walmart.com and eBay.com, all three of which maintained their top spots on this years list. Of those websites in the favorite 50 that sell fine jewelry, consumers chose Kohls.com (No. 4) and Target.com (No. 6) both of which moved ahead one spot from 2012, but JCPenney fell one place to No. 7, while Macys (No.😎 and Sears (No. 9) maintained their rank.

Forever21.com improved its favorite 50 position by one space to No. 17, while QVC.com fell eight places to No. 21 and Haband.com rose to No. 22 from No. 26 in 2012. Blair.com slipped one spot to No. 23, Nordstrom.com moved up by one to No. 24, Coldwatercreek.com slipped six places to No. 35 and Express.com fell back just one spot to No. 36. Roamans.com improved its standing five points to No. 38 and Belk.com debuted on the favorite 50 list at No. 39. Costco.com fell eight places this year to No. 40, LaneBryant.com slipped four places to No. 41, SamsClub.com (Walmart) debuted at No. 47 and Dillards.com fell six places to No. 48, according to Stores.

Mobile Browsing Outpaces Desktops

The 2013 Social & Mobile Commerce Report, produced by comScore Inc., The Partnering Group and Shop.org, revealed that 55% of retail related Internet time spent by consumers was through tablets and smartphones compared with 45% interacting with a desktop. Smartphone Internet usage alone has surged to 44% of total retail minutes online compared with only 17% in June 2010. The data was shared during Shop.orgs annual summit in Chicago this week and was meant to alert retailers to this important trend ahead of the all-important Christmas sales season.

Mobile has been elevated above any ancillary device or action since it now epitomizes how consumers think and act when they interact with retailers, said Shop.orgs executive director, Vicki Cantrell. Retailers have to continue to invest to make sure they get their mobile offerings right, or will increasingly risk alienating customers and leaving significant money on the table.

Sothebys Previews Hong Kong Sale

WATCH NOW: Quek Chin Yeow, the chairman of Asia for Sothebys, discusses the greatest white diamond ever to be offered at auction, a 118.28-carat, D, flawless, type IIa, oval-shaped stone that will be featured during its Hong Kong sale of magnificent jewels on October 7. Another top lot includes an exceptionally rare blue stone The Premier Blue, a 7.59-carat, IF, fancy vivid blue diamond.

Chinas Evolving Diamond Demand

WATCH NOW: Kent Wong Siu-Kee, the managing director of Chow Tai Fook Jewellery Group, discusses emerging trends, fashion jewelry, diamond jewelry and how demand is changing in the emerging consumer market of China. Wong was the keynote speaker for the annual Rapaport International Diamond Conference in Mumbai.

Factors Influencing Indias Growth

WATCH NOW: Dr. Suresh Surana, the founder of RSM Astute Consulting Pvt. Ltd., provides an outline of the external factors that are influencing Indias economy. Surana discusses the significant weakening of the countrys economic growth outlook, the current account deficit and high interest rates during his presentation at the annual Rapaport International Diamond Conference in Mumbai. He also provides an update on significant regulatory issues that are affecting the gem and jewelry industry.

GENERAL 	  

Zale to Sell 11M Shares

Zale Corporation registered an offering of almost 11.1 million shares on behalf of private equity firm Golden Gate Capital to sell some or its entire stake in the jeweler. Zale secured a $150 million loan from Golden Gate Capital in 2010 as it faced a liquidity emergency and the deal also enabled the lender to exercise warrants which cover more than 11 million shares. The move sent Zales shares lower, however, they are trading about 110% higher year on year.

Loeb Seeks to Oust Ruprecht

Daniel Loeb, the CEO of Third Point LLC, blasted Sothebys chairman and CEO, William Ruprecht (pictured), charging lack of leadership, operational alignment and strategic direction, among many other things, and called for his immediate dismissal.

Third Point became Sothebys top shareholder in September and Loeb expects a seat on the board where his top priority will be to hire a new CEO and keep that role separate from the boards chairman, according to his letter. Sotheby’s issued a brief statement saying it would not debate incendiary and baseless charges while its focus must be on serving clients during this critical fourth quarter sales cycle and added it would comment on Third Point at an appropriate time.

Birks Changes Name

Birks & Mayors Inc. changed its corporate name to Birks Group Inc. and its ticker symbol became BGI on the New York Stock Exchange (NYSE MKT). Companies forming part of the Birks Group include the retail brands of “Maison Birks” in Canada, “Brinkhaus” in Vancouver, British Columbia and Calgary, Alberta and “Mayors” in Florida and Georgia. Signage reflecting the new trade name will be changed at current retail stores over time, while signage at new stores already reflects this change.

GIA, Lazare Kaplan Reach a Deal

Lazare Kaplan International and the Gemological Institute of America (GIA) entered into a settlement and a license agreement for which GIA made a one-time payment of $15 million to the manufacturer. In addition, both parties agreed to release each other from all actions, causes of action and infringement claims asserted in or arising out of the litigation in Lazare Kaplan versus Photoscribe Technologies Inc.

Under the terms of the settlement, GIA dismissed with prejudice their respective claims asserted in the litigation and Lazare Kaplan granted a license to practice certain patents and GIA agreed to pay the company a per inscription royalty until July 31, 2016. Lazare Kaplan and Photoscribe continue to be parties to the litigation, which is pending before the District Court for the Southern District of New York.

NY Hosts Israel Diamond Week

The New York Diamond Dealers Clubs (DDC) will host a second Israel Diamond Week in Manhattan. It is expected that the DDC will entertain more than 100 Israel diamond companies from the Israel Diamond Exchange (IDE) on the trading floor from November 11 to 14. This trade event follows the successful program that was convened at the DDC in December 2012 and which initiated follow-up U.S./International Diamond Weeks in Israel in March and August of this year.

MINING 	  

ALROSA to List 16% of Shares

ALROSA will list 16% of its shares on the Moscow Stock Exchange as it prepares to officially start marketing to investors. The Russian Federation and Yakutia Republic will offer 7% each. In addition, Wargon Holdings, which is controlled by ALROSA, will offer 2% to help ALROSA repay existing debt. Analysts expect the listing to raise about $1 billion, pricing the shares at about $1 each and valuing the company at approximately $7 billion. The shares will trade on CJSC MICEX Stock Exchange, which is a subsidiary of the Moscow exchange, under the ticker symbol “ALRS.”

As expected, ALROSA sold its gas assets for $1.38 billion to Rosneft Oil Company. The proceeds will be used to repay ALROSAs outstanding debt. ALROSA’s gas assets included companies in the Yamalo-Nenets Autonomous District and the Republic of Sakha. The resource exceeds 200 billion cubic meters of natural gas and 40 million tons of liquid hydrocarbons. The deal is subject to required corporate and regulatory approvals.

Rockwells Production +46%

Rockwell Diamonds reported that diamond production grew 46% year on year to 7,046 carats in the second quarter that ended on August 31. The company attributed the higher production to a stronger focus on its Middle Orange River operations as well as to its royalty mining contract strategy at the Tirisano mine. The value of total diamond sales increased 25% year on year to $8.5 million and the average price increased 14% to $1,512 per carat.

Diamcor Recovers a Large Stone

Diamcor recovered an octahedron, 91.65-carat gem-quality diamond at the Krone-Endora, Venetia project. This is the first gem quality diamond over 10.8 carats recovered at the project. The company is assessing the diamonds color and quality through an independent expert. Diamcor acquired the Krone-Endora at Venetia project from De Beers Consolidated Mines in February 2011.

Gem Recovers Two Special Diamonds

Gem Diamonds recovered a rare blue, 12.47-carat diamond and an 83.80-carat exceptional-quality white diamond from its Letšeng mine in Lesotho in September. The blue diamond was recovered from the main pipe, while the larger diamond was recovered at the satellite pipe. Both diamonds will be sold at Letšengs upcoming tenders in Antwerp.

Diavik Appoints Cameron

Marc Cameron was appointed the president of Diavik Diamond Mines Inc. Cameron is a professional engineer who has been with Diavik since production commenced in 2003 and he has held several senior level roles within the company, most recently as vice president of operations. Cameron and his family reside in Yellowknife, Northwest Territories, Canada.

ECONWATCH 	  

Diamond Industry Stock Report

Largely a difficult week for U.S. retailers with only Kohls (+3%), Macys (+4%), Nordstrom (+2%) and Signet (+2%) showing small gains. European and Indian shares were mixed but LVMH (+6%) bounced back and Rajesh (+2%) and Ren. Jewellery (-7%) defined the gain/loss spread. Miners were mainly positive but Anglo (-7%) led the downside. View the extended stock report.

Oct. 3 Sept. 25 @ NY Noon Chng.
$1 = Euro 0.734 0.739 -0.005
$1 = Rupee 61.97 62.70 -0.7
$1 = Israel Shekel 3.55 3.55 0.00
$1 = Rand 10.03 9.95 0.08
$1 = Canadian Dollar 1.03 1.03 0.00

Precious Metals
Gold $1,316.80 $1,335.10 -$18.30
Platinum $1,370.00 $1,423.00 -$53.00

Stock Indexes Chng.
BSE 19,902.07 19,856.24 45.83 0.2%
Dow Jones 14,996.48 15,308.78 -312.30 -2.0%
FTSE 6,449.04 6,551.53 -102.49 -1.6%
Hang Seng 23,214.40 23,209.63 4.77 0.0%
S&P 500 1,678.66 1,696.42 -17.76 -1.0%
Yahoo! Jewelry 1,198.95 1,206.12 -7.17 -0.6%

Rapaport Weekly Market Comment Oct. 11, 2013

Polished prices soft due to weak demand and tight market liquidity. Pre-Diwali sentiment soft with Indian retail buyers transitioning from cash to memo purchases. Rapaport Melee Index -6% in 3Q. Rough prices unsustainable. De Beers under pressure as frustrated sightholders refuse 15% of estimated $570M Oct. sight with depressed secondary market. U.S. consumer confidence drops during government shutdown. Sotheby’s HK sells $95.5M (75% by lot) with oval, 118.28ct., D, FL diamond sold for $30.1M ($254K/ct.). Israel’s 3Q polished exports +44% to $1.4B, rough imports +30% to $856M. Shmuel Schnitzer elected president of Israel Diamond Exchange. Susan M. Jacques appointed CEO of GIA.

RapNet Data: Oct. 10

Diamonds 1,084,985
Value $7,004,597,513
Carats 1,204,265
Average Discount -27.75%

www.rapnet.com
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RAPAPORT ANNOUNCEMENTS
October
8-17
Tue-Thu
Rapaport Melee Auction

New York & Dubai

www.rapaportauctions.com

October
22-30
Tue-Wed

Rapaport Single Stone Auction

New York & Israel

View details.
QUOTE OF THE WEEK
To be successful, retailers must be able to satisfy consumers who, more than ever, want to shop on their terms and expect every step in the journey to be a seamless one, whether they are online, shopping in a store or using their phones. The list of consumer expectations of how they should be able to shop – from finding the same prices and promotions in a store as they do online to buying online and returning to a store – is getting longer every day. Increasingly, holiday-season winners will be defined by their ability to deliver a seamless experience to the consumer.

Chris Donnelly | Accenture

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INDUSTRY 	 

Refusals Mount at De Beers Sight

De Beers October sight carried and estimated value of $570 million before refusals, which were estimated at 15% as buyers grew frustrated over lack of market liquidity and profit margins. De Beers decreased prices by mid- to high-single-digit percentages on the Indian rejection goods but changed the assortments in some of the boxes, which effectively increased their value.

The company raised prices on some boxes, most notably in the 4 grainers to 8 grainers by low- to mid-single-digit percentages, with some adjustments made to the assortments. Comments from sightholders indicated that shifting prices and assortments do not make sense right now, and any reduction on smaller goods was not enough to overcome manufacturing losses.

Nonetheless, De Beers anticipates market improvement as the festive seasons of Diwali and Christmas get underway, followed by the Chinese New Year. Sightholders rejected about 20% of goods at the previous two De Beers sights with trading on the secondary market remaining quiet throughout the third quarter. Dealer demand in the week following the October sight has remained cautious.

The next sight will take place in Gaborone on November 11 to 14.

Melee Index Drops 6%

The Rapaport Melee Index (RMI™) for small diamonds decreased by 6% to 125.99 during the third quarter of 2013. The index is relatively flat compared with one year ago, when the September 2012 reading was 126.33. Overall, melee diamond prices continued to decline due to caution in India and China and despite anticipation that trading would strengthen ahead of the fourth quarter.

Trading among Indian dealers in the third quarter was subdued as they continue to deal with the volatile rupee and a cautious domestic retail environment. Rapaport Diamond Auctions sold over 78,000 carats of diamonds for $16.7 million during the third quarter of 2013.

Upcoming Rapaport Auctions:
• October 3 to 9 in New York and Israel
• October 8 to 17 in New York and Dubai
• October 22 to 30 in New York and Israel
• November 12 to 20 in New York and Israel
• November 19 to 28 in New York and Hong Kong

RETAIL & WHOLESALE 	  

U.S. Chain-Store Sales +4%

U.S. chain-store sales in September rose 4% year on year, according to the International Council of Shopping Centers (ICSC), led by strong drugstore sales (up 6%) and weakened by apparel (up 0.1%). For October, ICSC research anticipates that comparable-store sales will increase between 3% and 4%; however, the federal government shutdown does have the potential to curb spending.

Sothebys HK Sale Achieves $95M

Sothebys Hong Kong sale of magnificent jewels achieved $95,473,557 (HKD 744,693,750) and was 75% sold by lot. The top lot (pictured) was a 118.28-carat, D flawless, type IIa oval-shaped diamond that sold for $30.06 million or $254,000 per carat. Sothebys stated that the diamond achieved a record price and the sale total also set a record for a jewelry sale in Asia.

The second highlight of the sale, "The Premier Blue, a 7.59-carat, IF, flawless, fancy vivid blue diamond surrounded by brilliant-cut pink diamonds of 1.70 total carat weight, failed to find a buyer at the auction. Other top lots that did sell in Hong Kong included a set of two jadeite bead necklaces, which sold for $5.4 million and an unmounted, brilliant-cut 20.05-carat, D, flawless diamond, which sold for $4 million.

Swiss Watch Exports Flat

Swiss Watch exports remained flat year on year in August at $1.632 billion (CHF 1.486 billion), according to the Federation of the Swiss ‎Watch Industry.‎ The Federation noted that a reduction in shipments to China combined with one less business day during the month impacted the total number of timepieces exported. Exports of wristwatches remained flat at $1.536 billion during the ‎month, while the number of units shipped grew by 1% to 2.2 million. The value of other products rose by 9% to $96 million.

Politics Erode Consumer Confidence

The Gallup organization released its first weekly consumer confidence report since the federal government shutdown began and noted the largest weekly drop in sentiment since the Lehman Brothers collapsed in September 2008. U.S. consumer confidence from Gallups Economic Confidence Index tumbled 12 points to negative 34 this past week, the second-largest weekly decline since Gallup began tracking economic confidence daily in January 2008. The organization cited fiscal brinkmanship in Washington D.C. as the culprit for eroding economic confidence this month as well as in previous political squabbles inside the Capital Beltway.

Nurture Loyal Customers to Spread the Word

Loyal customers who champion a brand or product are key drivers to building new relationships and market reach, according to the 2013 Social Word-of-Mouth Study by Colloquy. Given the cluttered world of competing messaging, hashtags and tweets, it is more important now for retailers to nurture their followers in a very personal way to help spread the brands messages.

Colloquys report recommended that marketers identify their word-of-mouth champions first, since the loyalty program segment is usually delighted to help spread the word; use social and mobile methods as tool to ensure brand content is delivered in the format that best suits consumers behavior and preferences and, lastly, build engagement with customer segments based upon customer touch points not the latest social platform.

Gift Spending Expectations Improve

Accentures annual Christmas-shopping intention survey revealed that the average U.S. consumer who plans to buy gifts is expecting to spend about $646 this year, representing an 11% increase from one year ago. But the consultancy firm also found that 94% of shoppers will be hunting for sizable discounts from retailers. Additionally, the survey noted a strong appeal for Black Friday shopping, the highest in five years, coupled now with the ability to shop on Thanksgiving Day, which retailers only recently embraced to boost sagging sales.

Accenture concluded that consumers also expect a seamless approach to shopping between in-store, online and mobile channels. Sixty-three percent of shoppers expect to practice showrooming, where they visit a store but check online for a better price and make the purchase. However, a similarly high proportion of shoppers (65%) also plan to participate in “webrooming,” or browsing online and then going to a store to make their purchase, according to Accenture.

Sterne Agee Upgrades Tiffany & Co.

Sterne Agee analyst Ike Boruchow upgraded shares in Tiffany & Co. to Buy from Neutral with a target price of $86, citing a highly visible margin recapture opportunity in the upcoming 18 to 24 months, a rapidly growing international platform, which now accounts for about half the retailers sales, and a U.S. business segment that has made a number of key executive hires and implemented new product initiatives.

In a note to clients, Boruchow described impressive hires Anthony Ledru, head of the North American retail business, and Francesca Amfitheatrof, design director, as strong enough additions to the team that Tiffany & Co. can expect to revive its lagging U.S. business. The analyst wrote that Tiffany & Co.s margins carry the potential for up to a 400-basis-point improvement within 24 months due to lower raw materials costs, in store price increases, recovery in the silver business and improved sales trends.

Christies Highlights The Orange

Christies Geneva will present The Orange, a rare pear-shaped, 14.82-carat, VS1, type IIa, vivid orange diamond at its magnificent jewels sale on November 12. The diamond has a presale estimate of $17 million to $20 million. The Gemological institute of America (GIA) noted that strongly colored diamonds in the orange hue range seldom exceed three or four carats once they are polished.

Sothebys to Offer Walska Briolette Brooch

Sotheby’s Geneva will offer the “Walska Briolette Diamond Brooch,” created by Van Cleef & Arpels in 1971, during its magnificent jewels sale on November 13. This masterpiece design highlights the historic “Walska Briolette Diamond” that weighs 96.62 carats and was graded as a fancy vivid yellow, and it is priced to sell at $8 million. This special stone was once in the collection of opera singer and jewelry connoisseur Ganna Walska, but the briolette diamond was subsequently mounted as a brooch and most recently exhibited at Van Cleef & Arpels retrospectives.

The Gemological Institute of America (GIA) described the briolette as a natural, fancy vivid yellow diamond and assigned a VS2 clarity grade. The 96.62-carat diamond, suspended from the bird’s beak, can be detached and worn as a pendant, while the bird’s wings also detach to form a pair of earrings and the tail can be transformed into a brooch.

Rodeo Drive Hosts Watch Festival

The Rodeo Drive Committee and the City of Beverly Hills organized the Rodeo Drive Festival of Watches for October 10 to 13 to celebrate luxury watch brands with a street-wide open house and daily exhibits and parties. Twenty boutiques will feature product launches, exclusive watchmaker appearances, exhibition debuts and luxurious hospitality for their guests. In time for the festival, Breguet reopened its doors after extensive interior renovations, entertaining guests with a cocktail reception and a ribbon cutting ceremony.

Forevermark Stars in Christmas Book

Neiman Marcus unveiled its annual Christmas Book with a top gift from Forevermark, titled Roughing It, featuring an 11-day adventure from the U.S. to London and Namibia, a 25-carat rough Forevermark diamond that will be cut and polished by De Beers and then set in a custom design. The purchaser will even have dinner with De Beers CEO, Philippe Mellier, and Forevermarks CEO Stephen Lussier in the Tower of London, and visit rough-diamond sorting houses and a childrens community project in Africa. The Forevermark Ultimate Diamond Experience sells for $1.85 million.

Graff Reinvents Hair & Jewel Ad

Graff Diamonds debuted its Half Billion Dollar Hair & Jewel advertisement, which was a take-off from its famous 1970, $1 Million Jeweled Hair campaign that launched the brand globally. Graffs model highlights $500 million worth of rare and valuable diamonds in her carefully coiffed hair, specifically sculpted to accentuate each jewel. The advertisement also celebrates Laurence Graffs sixtieth year in the business and the opening of his fortieth store, according to the jewelers website.

Brauner Discusses Synthetic Issues

WATCH NOW: In his second consecutive year speaking at the Rapaport International Diamond Conference, Mark Brauner, the co-CEO of the International Gemological Institute (IGI) Worldwide addressed the most pressing issue: synthetic diamonds and their diffusion into the market. Brauner provided an overview of how man-made diamonds have evolved as well as the types of synthetic diamonds his laboratory has seen over the past year. He also provided some tips on how to identify man-made stones.

Kulhalli Addresses Indias Retail Challenges

WATCH NOW: Sandeep Kulhalli, the vice president of retail and marketing for Tanishq Jewellery, discusses the retail landscape in India for diamonds and jewelry. Trends have changed tremendously since the company launched and it has kept pace to become a brand of great prominence in the country. Kulhalli presented at the annual Rapaport International Diamond Conference in Mumbai.

De Beers Sight Dates 2014

Sight 1: January 20 to 24
Sight 2: February 24 to 28
Sight 3: March 31 to April 4
Sight 4: May 5 to 9
Sight 5: June 10 to 13
Sight 6: July 14 to 18
Sight 7: August 18 to 22
Sight 8: September 29 to October 2
Sight 9: November 3 to 7
Sight 10: December 8 to 12

GENERAL 	  

IDE Elects Schnitzer

Shmuel Schnitzer was elected as president of the Israel Diamond Exchange (IDE) with 57% of the vote. Schnitzer previously served as president of the IDE from 1998 to 2004. The IDE holds its presidential elections every two years. Schnitzer heads S. Schnitzer Diamonds Ltd. and is an honorary president of the World Federation of Diamond Bourses and of the IDE, as well as deputy chairman of the World Diamond Council. He is also a member of the committee that advises the Shanghai Diamond Exchange, a position he has held since it opened.

Sadove to Join JCPenney

J.C. Penney Inc.s board of directors elected Stephen I. Sadove as a new member of the board, effective upon his resignation from the board of directors at Saks Incorporated. Sadove, the chairman and CEO of Saks, will depart the luxury retailer when its merger with Hudsons Bay Company is completed before the end of the calendar year. Additionally, Geraldine B. Laybourne is stepping down from the JCPenney board.

GIA Appoints Jacques

The Gemological Institute of America (GIA) appointed Susan M. Jacques as its new president and CEO. Jacques, currently the president and CEO of Borsheims Fine Jewelry and Gifts in Omaha, Nebraska, and the chair of GIAs board, will take up her new responsibilities on January 1, 2014. At the board’s request, she has been its interim president and CEO since June 2013, following the departure of Donna Baker. GIAs board also appointed John A. Green, a board member since 2008, as board chair, replacing Jacques. Green is the CEO of Lux Bond & Green, a family-owned jeweler established in 1898 with eight locations in the U.S. states of Connecticut and Massachusetts.

Warren Buffett appointed Karen Goracke to replace Jacques as the president of Borsheims.

MINING 	  

ALROSA Recovers 235Ct. Stone

The Aikhal Mining and Concentration Mill, a business unit of ALROSA, recovered a 235.16-carat rough diamond in late September. ALROSA described the extraordinary diamond as gem-quality and it estimated the value in the range of $1.5 million to $2 million. The stone was produced from the depths of the Yubileynaya (Jubilee) diamond pipe and the crystal is transparent, with a yellow hue and there are small graphite-sulfide inclusions along the periphery.

Gemfields Auction Totals $9M

Gemfields auction of rough emeralds in Jaipur, India achieved $8.5 million and realized an average price per carat of $58. The mining company described the sale as comprised of predominately high-quality emeralds from various sources, 17 of 29 lots offered were sold and the market for these gems remains upbeat. The next auction of rough emeralds is scheduled to take place in Lusaka, Zambia in November. The company will offer predominantly lower-quality emerald and beryl from the companys Kagem mine.

Kennady to Raise $8M

Kennady Diamonds Inc. announced the terms of a non-brokered private placement whereby the company plans to raise approximately $8 million by issuing a combination of common shares and flow-through common shares. Earlier in the week, the company initially believed it could raise almost $5 million and then updated the figure to $7 million before a third upgrade Thursday. Concurrently, Kennady entered into an agreement with Dundee Securities Ltd. on behalf of a syndicate including Salman Partners Inc. under which the underwriters have agreed to purchase 728,000 flow-through common shares on a "bought deal" basis for proceeds of $4 million.

Lukoil Prepares Production Schedule 

Lukoil expects to produce rough diamonds from the Grib diamond mine by the end of November. While diamonds are not a core business for Lukoil, the Grib pipe represents a high-yield investment. The deposit was estimated to hold 98.5 million carats, representing $11 billion.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. shares mostly lower except for Birks (+10%), Movado, PureFunds, Saks (all +1%), Walmart (+2%) and Zale (+7%). European and Indian shares mixed but Damiani (+3%) and Classic Diamonds (+13%) pull ahead. Mining shares mainly higher except Peregrine (-3%), Rockwell (-5%), Shore (-6%) and Firestone (-4%). View the extended stock report.
Oct. 11 Oct. 3 Chng.
$1 = Euro 0.739 0.734 0.005
$1 = Rupee 61.36 61.97 -0.6
$1 = Israel Shekel 3.55 3.55 0.00
$1 = Rand 9.90 10.03 -0.13
$1 = Canadian Dollar 1.03 1.03 0.00

Precious Metals
Gold $1,286.70 $1,316.80 -$30.10
Platinum $1,382.00 $1,370.00 $12.00

Stock Indexes Chng.
BSE 20,272.91 19,902.07 370.84 1.9%
Dow Jones 15,126.07 14,996.48 129.59 0.9%
FTSE 6,430.49 6,449.04 -18.55 -0.3%
Hang Seng 22,951.30 23,214.40 -263.10 -1.1%
S&P 500 1,692.56 1,678.66 13.90 0.8%
Yahoo! Jewelry 985.29 1,198.95 -213.66 -17.8%

Rapaport Weekly Market Comment Oct. 18, 2013

TRADE ALERT: Buyers beware. Persistent reports that large amounts of synthetic lab grown diamonds are being mixed with natural diamonds in parcels of melee and pointers. Know your supplier and insist phrase “natural, untreated diamonds” be included on all invoices.
News: Polished market tough but improving ahead of Diwali and Thanksgiving. Buyers delaying inventory purchases amid persistent price uncertainty. SI strong, VVS weak. Rough market stalled. ALROSA valued above $8B ahead of Oct. 28 offering as 3Q production +10% to 9.9M cts. Rio Tinto’s 3Q production +12% to 4.2M cts. Gem Diamonds sells 12.47ct, blue diamond for $7.5M ($603K/ct). Strong demand, high prices at Argyle pink tender. Christie’s NY sells $47M (75% by lot) with rectangular-cut, 8.77ct, fancy intense pink, VVS1 ring fetching $6.3M ($721K/ct).
RapNet Data: Oct. 17

Diamonds 1,066,593
Value $6,933,721,217
Carats 1,188,924
Average Discount -27.83%

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RAPAPORT ANNOUNCEMENTS
October
22-30
Tue-Wed

Rapaport Single Stone Auction 

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12-20
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Rapaport Single Stone Auction

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QUOTE OF THE WEEK
In a relatively short period of time (since August), we have seen a pretty rapid deceleration in the U.S. ecommerce market. We really havent seen anymore positive signs in October. All of the anxiety we see when we pick up the newspaper every day makes us fairly cautious about how we look at the holiday season.

Bob Swan | eBay Inc.

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, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

ALROSA Production +10%

ALROSAs rough diamond production increased 9.5% year on year to 9.947 million carats in the third quarter that ended on September 30. The increase was primarily due to ALROSAs acquisition of the diamond-mining company Nizhne-Lenskoye, an increase in the ore processed at its Jubilee pipe and higher output from its Mir underground mine.

Specifically during the quarter, ALROSAs Jubilee pipe production surged 43% year on year to 2.456 million carats, while the Aikhal underground mine and Komsomolskaya pipe recorded no production during the period. Mirny divisions production increased 6.5% to 1.885 million carats and Udachny divisions production doubled to 480,000 carats. ALROSAs Nyurba division production declined 16.8% to 2.022 million carats, the Lomonosov division (Severalmaz) production was flat at 155,000 carats and Almazy Anabaras production slipped 2.4% to 1.553 million carats. Nizhne-Lenskoye production improved 13.9% to 1.397 million carats. ALROSAs production for the first nine months of 2013 has increased 6.3% year on year to 27.053 million carats.

ALROSAs shares are expected to open trading between RUB 35 and RUB 38, or about $1.04 to $1.18, when its public offering takes place on October 28. The listing in that range would value the company at between $8 billion (RUB 258.42 billion) and $8.7 billion (RUB 280.57 billion).

Rio Tinto Production +12%

Rio Tinto’s diamond production rose 12% year on year to 4.158 million carats for the third quarter that ended on September 30. Growth was driven by an increase in the amount of ore processed and higher-grades at the Argyle mine in Western Australia, following full commissioning of the underground mine in April 2013.

Production at Argyle rose 26% to 3.085 million carats, Diavik production dropped 13% to 1.003 million carats and Murowa production declined 24% to 70,000 carats. During the first nine month of the year, Rio Tinto’s total diamond production rose 17% to 11.529 million carats. Rio Tinto expects to mine 15.7 million carats of diamonds in 2013 compared with 13.122 million carats recovered in 2012.

RETAIL & WHOLESALE 	  

LVMH Jewelry, Watch Sales -2%

Luxury group LVMHs revenue rose 1.7% year on year to $9.5 billion (EURO 7.02 billion) in the third quarter that ended on September 30, however, organic growth, reflecting comparable-stores sales and at a constant-exchange-rate, rose 8%. Jewelry and watch division revenue slipped 1.9% to $914 million, marking the third consecutive quarterly decline. The fashion, leather goods and perfumes and cosmetics business groups also experienced single-digit sales declines in the third quarter. Overall revenue for the jewelry division fell 2% year on year to $2.68 billion for the first nine months.

Luk Fook Reports Strong Comps

Luk Fook Holdings reported strong sales growth during its second fiscal quarter that ended on September 30, without providing hard totals. Same-store sales in Hong Kong and Macau grew 30% year on year, while same store sales at its Mainland China stores rose 70%. Gold products and gem-set jewelry increased 56% in Hong Kong and Macau and by 10% in Mainland China. Sales during the National Day Golden Week, which began on October 1, grew 17% year on year in Hong Kong and Macau and 67% at the groups mainland locations.

Christies Jewels Sale Nears $47M

Christies New York sale of magnificent jewels achieved $46,675,125, which was above the presale estimate of $40 million, and was 75% sold by lot, with the top seven lots selling for more than $1 million each. The sale offered three loose stones from gem collectors with the top lot being an 8.77-carat, VVS1, rectangular‐cut fancy intense pink diamond ring that sold within estimate to Moussaieff Jewellers for $6,325,000. A 3.81-carat, VS1, fancy vivid blue, rectangular-cut diamond ring sold above its high presale estimate of $3.5 million and achieved $3,973,000. The third loose stone, a 5.13-carat, square-cut fancy vivid yellow diamond sold within estimate at $269,000.

Lazare Kaplan Revenue Falls

Lazare Kaplan International anticipates that revenue fell 30% year on year to $13.5 million for its first fiscal quarter that ended on August 31. The decrease in sales primarily reflected a decrease in sales of commercial (non-branded) polished diamonds, according to the firms notification of late filing with the Securities & Exchange Commission (SEC). The company only gives a reasonable estimate of its anticipated net sales due to ongoing litigation and material uncertainties, all of which have prevent Lazare Kaplan from filing quarter and fiscal year financial reports since May 2009.

Michael Hill Revenue +9%

Jeweler Michael Hill International reported a preliminary revenue increase of 8.7% year on year to $93.3 million (AUD 98.48 million) for the first quarter that ended on September 30. Overall, same-store sales rose 3.8 percent. By region and in local currency, sales at all stores in Australia rose 5.5%, while same-store sales increased 1.1%. Revenue at all stores in New Zealand declined 6.2% and same-store sales were 6.1% lower. Canada-based jewelry store revenue jumped 25.4% and comparable-store sales rose 5.9%. In the U.S., the retailers smallest market, overall sales declined 4.2% and same-store sales rose 7.2%.

Red Diamond Sells for $2M 

Rio Tinto’s 2013 Argyle Pink Diamonds tender achieved strong results with the top lot selling for over $2 million. Without providing specific details, the company stated that the Argyle Phoenix, a 1.56-carat, fancy red diamond, achieved the highest per carat price for a diamond ever produced from the Argyle mine, while the Argyle Dauphine, a 2.51-carat, fancy deep pink diamond, broke the record for the highest price paid for an Argyle diamond in value as well as setting a world record for a fancy deep pink diamond. The tender offered 64 diamonds from the Argyle mine in Australia, including three fancy red diamonds, and one pink, red and blue diamond ranging in size from 0.20 carats to 3.02 carats. The tender was 100% sold by lot.

Tiffany Proceeds With Watch Plans

Tiffany & Co. intends to proceed with plans to design, produce, market and distribute Tiffany & Co.-branded watches, according to a filing with the Securities & Exchange Commission (SEC). Communications from the Swatch Parties indicated the all agreements were automatically terminated as of October 1, enabling it to proceed with brand watch plans through alternative arrangements.

The luxury jeweler originally established an exclusive agreement with the Swatch Group and its affiliate Tiffany Watch Co. Ltd. in December 2007; however, the deal ended in a bitter and expensive court battle less than two years later. Swatch sued Tiffany & Co. in 2011 for $4 billion, citing lost revenue; Tiffany & Co. counter sued for $600 million. Both parties have been cooperating in a confidential arbitration proceeding to resolve the matter outside of the U.S.

Maison Birks Preps to Open in China

Maison Birks expects to open its first store in China, following the Chinese New Year in early 2014. The store will be located at the Xanadu Plaza in the central business district of Beijing and feature branded products, diamond and fashion collections and Maison Birks certified Canadian diamonds. The Maison Birks store in Beijing will be the brands first retail location outside of North America. The store design was conceived in partnership with Sid Lee, a Montreal-based design firm with an international reputation, and was inspired by Birks latest branding and visual platform.

Trent West, DAXX Settle Case

Trent West, the owner of nine patents related to the concept and manufacturing of Tungsten Carbide rings in the U.S., has reached a settlement agreement with DAXX, also known as (aka) Silver Bin. As part of the settlement agreement, DAXX will no longer sell Tungsten Carbide rings and will pay West an undisclosed amount for damages. West has four pending cases against Internet sellers for allegedly distributing and/or selling Tungsten Carbide rings without a license and is seeking permanent injunction against all defendants from further infringement and monetary damages from alleged infringement.

IDMA, WDMF Agree to Common Goals

IDMA presidents signed a memorandum of understanding with the World Diamond Mark Foundation (WDMF), agreeing to share common goals in seeking to sustain and improve consumer desirability and confidence in diamonds and diamond jewelry. The members also committed to have a meeting during the first quarter of 2014 with representatives of the international banks, citing concerns over long term banking policies as well as the extreme imbalance between prices of rough and polished.

Hearts On Fire Opens Second Store

Diamond brand Hearts On Fire opened at the King of Prussia Mall in Philadelphia, Pennsylvania, marking its second U.S. retail location. The companys retail concept features eye-level, transparent "Jewel Boxes" that replace traditional display cases along with lighting, sound, scents and soft materials that company confirmed appeals to all five human senses in order to create an enjoyable shopping environment.

The new store also features a digitally enhanced environment throughout the 1,200-square-foot space to empower consumers to learn about all aspects of the Hearts On Fire brand, including interactive screens, video and a digital jewelry catalog. There is also a "Community Table" that encourages shoppers to sit down and interact with each other as they try on diamond jewelry.

Stores are Central to Consumer Relationships

Business consultants at A.T. Kearney concluded that even though consumers expect to shop across multiple channels, retailers that fail to position their physical store at the center of the customer relationship are at a disadvantage. According to a new study “Recasting the Retail Store in Today’s Omnichannel World,” A.T. Kearney surveyed more than 3,000 consumers in the U.S. and U.K. to understand how and why consumers use different channels at each stage of the shopping process.

Survey results led the group to recommend retailers strategically deploy their brick and mortar asset(s) and integrate with their other channels to drive increased customer traffic, brand loyalty and improved performance. The study found that 61% of consumers spent the majority of their time shopping in stores, 31% shopped online, 4% bought through catalogs and 4% via mobile device.

The physical store was the leading channel of choice across all demographics. Retailers should strategically assess and recast the role of stores along the following five dimensions: Discovery, entertainment, relationship, transaction and fulfillment.

U.S. Consumers Scale Back Gift Spending

The National Retail Federation (NRF) released its annual Christmas-season consumer survey, which revealed that 91.7% of U.S. consumers celebrate a fourth-quarter holiday, with 94.8% celebrating Christmas, while 6.5% celebrate Hanukkah and 2.8% recognize Kwanzaa. On average, consumers who celebrate expect to spend $536.85 on gifts, representing a 2.5% decline from 2012. The NRF found that overall spending intentions this year for gifts, decorations, greeting cards and flowers combined, was 1.9% lower at $737.96 on average.

Of those who celebrate and expect to receive gifts, 23.3% selected jewelry or precious metal accessories as their choice. In recent years the figure was 24% in 2012, 22.8% in 2011, 23% in 2010 and 20.8% in 2009. The NRF concluded that U.S. consumers were clearly watching their spending this year and seeking deep discounts.

MINING 	  

Diavik Production -14%

Dominion Diamond Corporation reported Diavik diamond mine production fell 13.5% year on year to 1.7 million carats for the third quarter that ended on September 30. Dominion Diamond owns a 40% stake in the mine, while Rio Tinto owns a 60% share.

Despite the reduction, Dominion confirmed that Diaviks production goal of 7.3 million carats this year remains on target. Dominion Diamonds production at the Ekati diamond mine included 400,000 carats from reserves and 300,000 carats from coarse ore rejects and diamond-bearing kimberlite excavate from a satellite body in the Misery open pit. Dominion Diamonds acquired Ekati on April 10. One year ago, BHP Billiton reported producing 313,000 carats during the same period.

Blue Stone Fetches $603K Per Carat

Gem Diamonds Limited sold a rare, rough 12.47-carat blue diamond from the Letseng mine for $603,047 per carat, or $7.52 million. In addition, the mining company sold an 82-carat, exceptional quality rough diamond for $59,173 per carat, or $4.8 million. gem diamonds Both diamonds were recovered in September. Gem Diamonds continues to expect recovering high-quality diamonds at Letšeng.

Rockwell Narrow Loss

Rockwell Diamonds reported that revenue rose 33.4% year on year to $9.9 million in its second fiscal quarter of 2014, which ended on September 30. Rough diamond sales jumped 24% to $8.6 million, while beneficiation income surged 185% to $1.3 million. The mining company narrowed its loss to $1.4 million compared with $2 million one year ago. Rockwell carried forward an inventory of 2,508 carats into the third quarter and it recorded 6,272 carats in the beneficiation pipeline.

Pangolin Discovers New Kimberlite

Pangolin Diamonds discovered a new kimberlite, Martin 01, at its Tsabong north project in Botswana. A single hole was drilled into the magnetic target, crater volcanic sediment was intersected at 85 meters below the surface and sandy tuffs were intersected at a depth of 105 meters. This kimberlite is distinguished from other kimberlites in the region in that it has a cover of Karoo sediments, including poorly developed thin coal seams. This is the first recorded discovery of a kimberlite in Botswana below the Karoo Formation in the area. Core samples are being submitted to independent laboratories to recover any indicator minerals and any diamonds.

De Beers Opts Out of Chidliak

Peregrine Diamonds Ltd. was notified by De Beers Canada Inc. that the mining giant does not intend to exercise its right to enter into an earn-in and joint-venture agreement with the junior miner on the Chidliak diamond project in Nunavut, Canada. Peregrine has been processing approximately 250 wet tonnes of a 508-tonne bulk sample collected from the propertys CH-6 kimberlite pipe.

Approximately 150 tonnes of the sample have been processed so far and De Beers is funding this and the subsequent diamond recovery at the Saskatchewan Research Council. Final results from the sample, including an independent diamond valuation, are expected in the first quarter of 2014.

Lesotho Grants License to Paragon

Paragon Diamonds was awarded a mining license by the Lesotho Ministry of Mines for its 85% owned Lemphane kimberlite project. The license is for a 10 year period and will expire on October 9, 2023 with an option to renew. The company is still negotiating royalty terms with the government.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. shares slightly higher on average except for Birks (-6%), JCP (-8%) and Charles & Colvard (-1%). Hong Kong shares gain on upbeat sentiment. Europe mixed and brought down by disappointing results from LVMH (-5%). Indian shares mixed with Goldiam (-9%) and Vaibhav (+6%) marking the spread. Other than Peregrine (-42%), Rockwell (-7%) and Stellar (-8%), diamond miners were all higher. View the extended stock report.

Oct. 17 Oct. 11 Chng.
$1 = Euro 0.730 0.739 -0.009
$1 = Rupee 61.10 61.36 -0.3
$1 = Israel Shekel 3.52 3.55 -0.03
$1 = Rand 9.82 9.90 -0.08
$1 = Canadian Dollar 1.03 1.03 0.00

Precious Metals
Gold $1,319.90 $1,286.70 $33.20
Platinum $1,434.00 $1,382.00 $52.00

Stock Indexes Chng.
BSE 20,415.51 20,272.91 142.60 0.7%
Dow Jones 15,366.77 15,126.07 240.70 1.6%
FTSE 6,576.16 6,430.49 145.67 2.3%
Hang Seng 23,094.88 22,951.30 143.58 0.6%
S&P 500 1,732.85 1,692.56 40.29 2.4%
Yahoo! Jewelry 969.35 985.29 -15.94 -1.6%

Rapaport Weekly Market Comment Oct. 25, 2013

TRADE ALERT: Buyers beware. Persistent reports that large amounts of synthetic lab grown diamonds are being mixed with natural diamonds in parcels of melee and pointers. Know your supplier and insist phrase “natural, untreated diamonds” be included on all invoices.

News: Polished buyers in India looking for deals before Diwali vacation Nov. 1-15 but suppliers resisting lower prices even though local market is weak. U.S. stable with very strong demand and firming prices for SI goods despite slump in consumer confidence. Rough markets quiet as manufacturers take early Diwali vacation. De Beers begins $2B Venetia underground construction, 3Q production +21% to 7.7M cts. Chow Tai Fook’s 2Q revenue +35%, gem-set jewelry same-store sales +4%. India’s Sept. polished exports +11% to $1.7B, rough imports -6% to $1.3B. Belgium’s Sept. polished exports +3% to $1.4B, rough imports -3% to $1.1B. U.S. Aug. polished imports +30% to $1.7B, exports +33% to $1.7B. ABN Amro to close Botswana office.
RapNet Data: Oct. 24

Diamonds 1,068,701
Value $6,989,359,787
Carats 1,196,901
Average Discount -27.94%

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RAPAPORT ANNOUNCEMENTS
October
22-30
Tue-Wed

Rapaport Single Stone Auction

New York & Israel
www.rapaportauctions.com
November
12-20
Tue-Wed
Rapaport Single Stone Auction

New York & Israel

View details.
QUOTE OF THE WEEK
We’ve only accelerated [corporate responsibility] in the past year -- with our commitments on renewable energy, to reduce certain chemicals in products and to help revitalize manufacturing in the U.S. We set the pace for how companies take on big issues facing society, and we’ll keep leading because it’s good for our business.

Mike Duke | Walmart 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, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

De Beers Production +21%

De Beers Group reported that diamond production jumped 21% year on year to 7.731 million carats for the third quarter that ended on September 30. Debswanas diamond production surged 24% to 5.446 million carats, while production in Canada increased 50% to 485,000 carats. Namdebs diamond production rose 6% to 445,000 carats and De Beers Consolidated Mine production was 9% higher at 1.355 million carats.

In summary, rough diamond production rose in large part due to the restoration of De Beers operations at the Jwaneng diamond mine in Botswana, following a slope failure incident in June 2012. Production from the Snap Lake diamond mine in Canada was also significantly higher due to increased mining volume. Debswanas diamond production, however, was impacted by the Orapa plants maintenance and lower grades. Production at Venetia continued to improve following a pit flood earlier in the year.

For the first nine months of 2012, De Beers production has improved 11% year on year to 22.026 million carats.

Chinas Jewelry Sales Rise

The National Bureau of Statistics of China reported that retail sales rose 13.3% year on year to $339 billion (CNY 2.065 trillion) during the month of September. Retail sales for January through September in China have surged 12.9% year on year to $2.8 trillion. The data revealed that consumer spending on gold, silver and jewelry in September skyrocketed 18.2% year on year to $3.6 billion. Consumer spending under that metals and jewelry category has risen 29.6% for the first nine months of 2013 to $37 billion.

Swiss Watch Exports +9%

Swiss Watch exports grew 8.5% year on year to $2.1 billion (CHF 1.9 billion) in September, according to the Federation of the Swiss ‎Watch Industry.‎ An additional working day in September as well as an increase in exports of steel, platinum and gold watches impacted the rise in exports in value terms during the month.

Exports of wristwatches rose 8.3% to $1.982 billion, while the number of units shipped fell by 4.3%. The value of other products grew by 28% to $51.6 million. Exports to Hong Kong rose 10% to $406.2 million, while exports to the U.S. grew 17% to $229.5 million. Exports to China continued to lose ground and fell 3% to $139.8 million.

RETAIL & WHOLESALE 	  

Chow Tai Fooks Revenue +35%

Chow Tai Fook observed that group revenue grew 35% year on year in the second fiscal quarter that ended on September 30. Without providing hard totals, the retailer cited strong growth in the sale of gold products and improved wholesale revenue.

Group sales in Mainland China rose 33% and jumped by 38% in Hong Kong and Macau. Group same-store sales during the quarter increased 18%, with China up 12% and Hong Kong and Macau rising 26%. Chow Tai Fook reported that same-store sales growth of gem-set jewelry rose 4%, while gold product same-store sales grew by 33%, driven mainly by a notable volume increase for luxury jewelry. The group anticipates that its mass luxury jewelry segment will continue to be a major growth driver.

Pure Golds Eid Sales Jump

Pure Gold Jewellers observed a 20% increase in gold jewelry sales during the Eid Al Adha festive season, though it did not provide a hard total. Firoz Merchant, the chairman of Pure Gold Jewellers, stated that even with a surge in gold jewelry sales during the festival period, diamond jewelry sales remained the same as last year.

Pure Gold Jewellers offered a 70% discount on its contemporary range of Pure Diamonds collection for Eid Al Adha and offered chances to win a certified diamond solitaire on purchases of gold or diamond jewelry. Merchant added that the retailer is now preparing for the rush expected for the Indian festival of Diwali and Dhanteras, the auspicious day when South Asian customers buy jewelry.
Cash Americas Profit Soars

Cash America International Inc. reported its revenue slipped 0.4% year on year to $437.8 million for the third quarter that ended on September 30; however, profit surged to $46.2 million from $7.9 million one year ago. The companys management believes that opportunities for growth in revenue and earnings this year will be largely associated with customer demand for its credit products, which take the form of pawn loans and consumer loans and the disposition of unredeemed collateral by way of consumer spending on retail sales and the commercial sale of refined gold and diamonds.

Bonhams Sale Achieves $6M

Bonhams auction of fine jewelry in New York achieved nearly $6.3 million and was 85% sold by lot. The top lot sold for $461,000 and featured a 5.85-carat, oval-cut Kashmir sapphire and diamond ring. The auction house stated that the ring ignited a phone bidding war and the final price realized was more than four times the presale estimate. Diamond sale highlights included an 8.06-carat (pictured), pear-shaped, natural fancy light pink diamond that achieved $389,000 and an 8.45-carat diamond, platinum and 18-karat gold ring that sold for $293,000, more than triple its presale estimate.

Walmart Plans China Expansion

Walmart plans to add as many as 110 stores in China during the next three years, while closing 30 underperforming outlets and remodeling 45 stores. It is planning to target smaller cities outside of Beijing and Shanghai for expansion and it is investing in distribution centers to reduce operating costs. The retailer stated that China presents one of the biggest opportunities to grow revenue and profit, especially since U.S. shoppers are more reluctant to spend. Walmart reduced its guidance for the U.S. this year.

Retailers Win With Jewelry + Gifts

Independent jewelers who identify and position themselves as a retailer of jewelry and gifts could enhance their retailing position, according to the latest Unity Marketing resort titled "A Declaration of Independents." Unity Marketings president, Pam Danziger, said that retailers should strive to describe their store not around the things they sell, but around the experiences they deliver to the customer.

Danziger found that among the 350 independent specialty retailers surveyed, most defined themselves either primarily or secondarily as a "gift store." However, how they identified the store had a dramatic impact on revenue. "In our survey, we found that stores that identify themselves primarily as gift stores bring in less than half the revenue as those who see themselves only secondarily as gift stores," explained Danziger.

"While those who identified first as gift stores had average revenue of around $600,000, those who identified second as gift store brought in $1.3 million," she said. The survey noted, stores that described themselves as jewelry plus gifts, home furnishing and gifts, and/or fashion and gifts performed much better than retailers that described themselves primarily as a gift store.

James Avery Plans Visitor Center

Jewelry retailer James Avery plans to build a new retail store and visitor center at its corporate headquarters in Kerrville, Texas. The company broke ground this week in the Texas Hill Country on its new 4,000-square-foot facility that was designed by David Martin, of A3 Studio, in collaboration with in-house architect Howell Ridout and the Avery family. Careful attention was paid to integrating the retailers new look with the traditional hill country architecture. A greatly expanded visitors center overlooks a park setting where visitors and travelers may gather and relax, according to the firm.

Tiffany Redesigns Online Channel

Tiffany & Co. redesigned and relaunched its tiffany.com channel with interactive pathways to explore the brands heritage and prominence just in time for Christmas season. The new tiffany.com website features high-resolution visuals and video and it enables customized searches by category, designer, price, materials and gemstones.

The jeweler expanded its informational portfolio online by highlighting quality standards, the 4Cs and how it sources gemstones, while respecting and upholding human rights and responsible environmental practices. The sites new sections focus on the brands evolution as a preeminent jeweler, features the Blue Book, the workshop above the Fifth Avenue flagship store, a timeline of the companys history and stories of real-life couples who recall-on film and in photographs-the thrill of the brand.

Forevermark Launches in Australia

Forevermark launched the brand in Australia with retailer partners, including Diamonds International, Musson and Percy Marks in the cities of Brisbane and Sydney. Forevermark also extended an existing partnership with Canada-based Forevermark diamantaire, Crossworks Manufacturing, to now include Australia. Crossworks engaged Australia-based Storch & Co. to oversee local distribution.

Affluents Spending Mood Sours

Affluent households in the U.S. have turned overwhelmingly pessimistic about the economy and their spending plans for the upcoming Christmas season, according to the latest luxury tracking survey by Unity Marketing. Several key indicators of consumer confidence havent been this low since the recession of 2008 and 2009. Affluents expectations on future luxury spending this Christmas also took a dramatic downward turn with only 20% of those surveyed planning to spend more on luxury goods compared with 31% one year ago. Furthermore, 28% expect to spend less and that up from 18% last year.

Unity Marketing urged retailers to pull out all the stops in terms of promotions and discounting this season to attract these cautious shoppers. The most important feature affluents say they will look for when choosing a gift is to find it on sale or at a deep discount. The second most important feature that makes a gift appealing is that it be Made in USA, which reflects affluents growing desire to support U.S.-based companies. The average amount affluents expect to spend on Christmas-season gifts is $1,730, according to the firm.

GENERAL 	  

ABN Closes Botswana Branch

ABN AMRO Bank N.V. prepared to close its office in Botswana, which currently includes a team of four employees from the banks international diamond and jewelry group. According to the banks statement, it continued to recognize the importance and favorable position of Botswana within the diamond and jewelry sector, however, the scale of the banks operations in the country in the context of its global reach was just too limited to be sustainable.

Clients were being informed of the decision this week and ABN AMRO stated that it is working with each client to find ways in which the business relationship may continue from other locations.

IDE Names Board

The Israel Diamond Exchange (IDE) announced the following board names: Shmuel Schnitzer, president; Jacob Korn, deputy and vice president; Jacob Kattan, senior vice president; Arnon Yuval, vice president; Yehezkel (Hezi) Blum, vice president and chairman of the finance committee; Ben Zion Shashu, vice president; Jacob Haron Shelly, vice president; Mordechai (Moti) Fluk, treasurer; Meir Dalumi, chairman of the judicial committee; Yoram Dvash, honorary secretary; Shlomo (Shizo) Shimshowitz, honorary secretary; Shalom Papir, member of the presidium and board members Loni Grinker, Yosef Ben Zion, Amotz Raz, Emma Yanover and Muni Bachar.

Angola Poised for Growth

Sínese and investment services firm Eaglestone believe that Angola’s diamond industry is poised for growth following the enactment of more investor-friendly mining laws and relatively untapped reserves of high-quality diamonds. Angolas production has been relatively flat since 2010 at 8.3 million carats, down from a peak of 9.7 million carats in 2007. But with simplified paperwork, the possibility of private sector investors and significant alluvial diamond deposits, the consultants believe Angolas production could reach its earlier peak shortly.

MINING 	  

Venetia Breaks Ground on Second Life

The De Beers Group began construction of its new underground mine beneath the open pit Venetia diamond mine in Limpopo Province, South Africa. This $2 billion investment is expected to extend the life of Venetia beyond 2040 and replace the open pit as South Africa’s largest diamond mine. With underground production expected to begin in 2021, over its life of the mine, De Beers anticipates producing 96 million carats from approximately 130 million tonnes of ore. The underground mine will support over 8,000 jobs directly and another 5,000 across the supply chain, according to De Beers.

Canada Approves Gahcho Kue

The Minister of Aboriginal Affairs and Northern Development Canada, Bernard Valcourt, approved the development of the De Beers Canada and Mountain Province Diamonds Inc.s Gahcho Kue diamond mine as recommended by the Mackenzie Valley Environmental Impact Review Board. De Beers stated that the Gahcho Kue diamond mine will meet the highest standards, benefit the economy and residents of the Northwest Territories and enhance Canadas position as a premier diamond producer.

The partners expect Gahcho Kue to employ close to 700 people during the two years of construction and almost 400 people during its operations phase. It is forecast to produce an average of 4.5 million carats annually over the 11 year mine life.

Kennady Raises $9M

Kennady Diamonds Inc. closed its non-brokered private placement of flow-through and non-flow-through common shares for gross proceeds of $9 million. The exploration company issued 247,100 flow-through common shares at a price of $5.50 per share and 1,608,621 non-flow-through common shares at a price of $4.75 per share. The shares are subject to a four-month hold period, expiring on February 21, 2014. Proceeds of the private placement will be used primarily for the companys 2014 exploration program at the Kennady north diamond project and for general working capital.

Diamcor Sells 92-Carat Stone

Diamcor Mining Inc. sold a 91.72-carat, gem-quality octahedron rough diamond for $817,920, or $8,918 per carat. It was the first gem-quality diamond sold by the mining company in the 50-carat-plus category. large diamond The diamond was sold as part of a 2,654.63 carat parcel of rough diamonds from the companys Krone-Endora at Venetia diamond project that generated proceeds of $1.15 million.

The majority of rough diamonds sold were recovered in conjunction with ongoing testing and commissioning exercises on the lower-grade upper zone material, nonetheless, the value per carat achieved from the sale exceeded the companys expectations. To date, Diamcor Mining has sold 14,110.48 carats for $2.93 million, or $207.51 per carat on average from the ongoing commissioning and testing exercises.

Firestone Improves Valuation

Firestone Diamonds upgraded the average value of diamonds from its Liqhobong mine in Lesotho to $107 per carat, compared with a previous valuation of $98 per carat. Large diamonds over 100 carats were valued at $156 per carat. The report analyzed a large production parcel from Liqhobongs pilot plant that was recovered and sold over the past 22 months. Firestone recovered 325,000 carats between September 2011 and July 2013.

Dominion Preps to Extend Ekati

Dominion Diamond Corporation applied for a new land use permit and a class A water license for the extension of the Ekati diamond mine to include the Jay and Cardinal kimberlite pipes. The application was filed with the Wekéezhii Land and Water Board (WLWB). The Jay-Cardinal project has the potential to extend Ekatis mine life by 10 to 20 years beyond the currently scheduled date of closure in 2019, according to the company.

LNG to Save Renard Operating Costs, Emissions

Stornoway Diamond Corporation determined that a Liquefied Natural Gas (LNG) fueled power plant at the Renard diamond project would reduce the companys annual operating costs and greenhouse gas emissions. The exploration firm conducted a feasibility study through SNC-Lavalin Inc. and AMEC America Ltd. to demonstrate the benefits of LNG compared with the currently planned diesel generator-set option. The study determined that Renard could reduce its annual operating costs between $8 million and $10 million using LNG for an incremental capital cost of $2.6 million over the cost of diesel gen-sets. Furthermore, the report estimated that LNG would reduce greenhouse gas emissions by 43%, compared with diesel, along with significant reductions of NO2 and SO2.

STATS 	  

U.S.A.

Aug. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,667 30% $15,389 14%
Polished exports $1,695 33% $13,261 15%
Net imports ($28) $2,130 6%

Rough imports $32 -20% $330 -4%
Rough exports $39 96% $193 -13%
Net imports ($7) $137 11%

Net diamond account ($35) $2,267 6%

Belgium

Sept. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,367 3% $10,355 4%
Polished imports $1,379 17% $10,193 2%
Net exports ($12) $163

Rough imports $1,049 -3% $9,927 10%
Rough exports $1,197 4% $10,811 10%
Net imports ($149) ($888)

Net diamond account $137 -40% $1,046 39%

India

Sept. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,684 11% $16,123 23%
Polished imports $606 112% $5,507 32%
Net exports $1,078 -13% $10,616 4%

Rough imports $1,282 -6% $12,295 13%
Rough exports $124 -22% $1,431 16%
Net imports $1,158 -4% $10,864 1%

Net diamond account ($80) ($249)

ECONWATCH 	  

Diamond Industry Stock Report

Gains were uneven across the main trading centers with Blue Nile and PureFunds (+7%) leading the U.S., Richemont (+3%) ahead in Europe and Gitanjali (+24%) well above Indian competitors. Investors pulled back on miners with Stornoway, True North, Firestone and Gem Diamonds all down by double-digits. View the extended stock report.

Oct. 24 Oct. 17 Chng.
$1 = Euro 0.720 0.730 -0.010
$1 = Rupee 61.45 61.10 0.4
$1 = Israel Shekel 3.52 3.52 0.00
$1 = Rand 9.76 9.82 -0.06
$1 = Canadian Dollar 1.04 1.03 0.01

Precious Metals
Gold $1,347.30 $1,319.90 $27.40
Platinum $1,448.00 $1,434.00 $14.00

Stock Indexes Chng.
BSE 20,725.43 20,415.51 309.92 1.5%
Dow Jones 15,509.21 15,366.77 142.44 0.9%
FTSE 6,713.18 6,576.16 137.02 2.1%
Hang Seng 22,835.82 23,094.88 -259.06 -1.1%
S&P 500 1,752.07 1,732.85 19.22 1.1%
Yahoo! Jewelry 988.70 969.35 19.35 2.0%

Rapaport Weekly Market Comment Nov. 1, 2013

TRADE ALERT: Buyers beware. Persistent reports that large amounts of synthetic lab grown diamonds are being mixed with natural diamonds in parcels of melee and pointers. Know your supplier and insist phrase “natural, untreated diamonds” be included on all invoices.

News: Global demand very weak for this time of the year. U.S. market OK and better than the rest of the world but not as strong as expected before the holiday season. Reports of possible hike in India’s polished diamond duty from 2% to 5% dampens Diwali mood. Rough trading quiet. ALROSA valued at $8.1B in Moscow share listing. Titan Company’s 2Q sales +1% to $372M, net profit +4% to $30M. Blue Nile’s 3Q sales +10% to $99M, net profit +67% to $3M. U.S. Aug. jewelry store sales +7% to $2.4B. De Beers names Paul Rowley to succeed Varda Shine in Jan. We wish everyone a happy Diwali and a prosperous new year.
RapNet Data: Oct. 31

Diamonds 1,050,779
Value $6,905,923,834
Carats 1,185,170
Average Discount -27.91%

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RAPAPORT ANNOUNCEMENTS
November
3
Sun

Synthetic Diamond Crisis 

Presentation by Martin Rapaport
Gem-A Conference London
Goldsmiths Hall
1:45 p.m.
Email amandine(at)gem-a.com for info.
November
11-19
Mon-Tue

Rapaport Jewelry Sale 

New York

www.rapaportauctions.com
November
12-20
Tue-Wed

Rapaport Single Stone Auction

New York & Israel

View details.
QUOTE OF THE WEEK
The diamond trade must wake up to the fact that diamonds are only as good as the people who sell them. The mixing of blood diamonds and synthetic diamonds with legitimate diamonds and their fraudulent sale to consumers is evil and must be stopped. Responsible jewelers and consumers must reject unethical suppliers who should be named, blamed and shamed.

Martin Rapaport | Rapaport Group

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, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

India to Raise Diamond Duty

India now plans to raise the import duty on cut and polished diamonds to 5% from 2%, according to Business Standard, and the government is allegedly implementing this duty in the interest of small-scale diamond manufacturers. Vipul Shah, the chairman of the Gem & Jewellery Export Promotion Council (GJEPC), noted that rising imports of cut and polished diamonds pose a threat to small scale manufacturers, adding that a higher duty would discourage trading and, thus provide relief to small manufacturers who are unable to sustain their business due to high manufacturing costs. The increase wont affect jewelry exporters as the duty is taken back from the government through an export incentive scheme known as Duty Entitlement Passbook Scheme (DEPS).

Rapaport to Address Synthetic Crisis

Martin Rapaport, the chairman of the Rapaport Group, will address the threat of synthetic diamonds being mixed with natural diamonds without disclosure on November 3 at 1:45 p.m. at Goldsmiths’ Hall in London during the Gemmological Association of Great Britain (Gem-A) anniversary conference. Rapaport will provide insight into the challenges and opportunities facing the diamond industry with practical policy guidelines that can ensure a sustainable ethical diamond trade.

To attend the conference, please send your request to Amandine Rongy, email: amandine(at)gem-a.com and to receive a copy of Rapaports speech, email: media(at)diamonds.net.

WFDB Vows to Prosecute Fraud

The World Federation of Diamond Bourses (WFDB) acknowledged that synthetic diamonds have a place in the market, but goods must be identified as such and it warns the trade that severe action will be taken against anyone found to have knowingly misrepresented synthetic diamond disclosure. The WFDB vowed to work with all legal agencies across the globe to assist in the prosecution of those who participate in this type of industry fraud.

RETAIL & WHOLESALE 	  

Jewelry Store Sales +7%

U.S. jewelry store sales rose 6.9% year on year in August to $2.389 billion. The pace of growth was down from 9% in July. And while the consumer price index (CPI) for jewelry rose just 2.5% year on year in August, it was flirting with the record high of 183 points. Jewelry store sales for the first eight months of 2013 have risen 9.2% year on year to $19.652 billion.

Meanwhile, advanced estimates for retail sales at U.S. department stores in September fell 6.7% year on year to $12.686 billion. Total retail and food services sales rose 3.5% to $425.9 billion. Nonstore retail sales increased 8.9% and retail trade sales increased 3.1%.

Blue Niles Profit +67%

Blue Niles revenue increased 10.1% year on year to $98.925 million for the third quarter that ended on September 30, while cost of sales increased 10.1% to $80.238 million. Profit jumped 66.9% to $2.906 million or 23 cents per share and included an income tax benefit of $1.1 million or 8 cents per share from certain tax items. Gross profit as a percent of net sales rose to 18.9% compared with 18.8% one year ago.

U.S. engagement revenue improved 7.1% to $57.9 million and non-engagement sales increased 9.6% to $23.9 million. International sales jumped 22.9% to $17.1 million, excluding the impact from changes in foreign exchange rates the increase was 27.6%.

Titans Profit +4%

Titan Company Limited, formerly Titan Industries Limited, owners of the Tanishq jewelry brand in India, reported that sales rose 1.4% year on year to $372.3 million (INR 22.9 billion) in what the company called a challenging second quarter that ended on September 30. Profit grew 3.6% to $30.3 million. Jewelry sales, which included revenue from the companys three major jewelry brands Tanishq, GoldPlus and Zoya, rose 4.3% to $292.4 million and watch division sale fell 6% to $71.9 million.

Chow Tai Fook Expects Stronger Profit

Chow Tai Fook notified shareholders that it expects significant growth in its profit for the six month period that ended on September 30; however, the retailer did not provide hard totals. Profit was reportedly given a boost from strong gold product sales, coupled with the reduced hedging losses on gold loans during the period. The group is expected to release its interim results in late November.

Jewelry CPI Flat

The U.S. consumer price index (CPI) for jewelry rose 0.2% year on year in September to 181.01 points, a full point lower than August but the second-highest reading of 2013. The highest CPI was 183.19 points in January 2012. The average monthly CPI for the first nine months of the year was 0.3% lower year-on-year at 177.97 points. The CPI reading in September was the eleventh ever to exceed 180 points and it marked the 33rd consecutive month with a reading of more than 170 points, continuing to maintain a historically strong inflation trend.

Gemesis Launches Pink Collection

The Gemesis Diamond Company, producer of lab-grown diamonds and jewelry, added a fancy pink collection to its ecommerce Gemesis.com channel. The new palette of pinks includes "blush" and "brilliant" shades. Gemesis previously only offered lab-grown yellow and type IIa colorless stones on its website. Gemesis fancy pink collection is marketed to consumers as high-clarity stones in a selection of rounds. The company explained to consumers that all lab-grown diamonds over 0.23-carat sold on Gemesis.com are certified and laser-inscribed by the International Gemological Institute (IGI).

AARC: 14% Select Jewelry Gift Choice

The American Affluence Research Center (AARC) concluded that the wealthiest consumers in the U.S. have a slightly better outlook on the economy and their finances than the general public; however, this view was not quite enough to boost the affluents expected gift spending plans over Christmas 2013 compared with 2012. AARCs proprietary research revealed that average gift spending would decline by 2.8% year on year to $2,175 per affluent household, representing a total market value of $23.6 billion, about the same as 2012 after allowing for the households that will not buy gifts.

AARC also determined that expected spending plans usually are conservative to what affluents actually spend. Of the favorite gifts items chosen by affluents in the survey, AARC found that 14% selected fine jewelry (2% of men and 27% of women) as a gift theyd like to receive for Christmas, and 7% selected a watch (5% of men and 11% of women), both averages of which were about the same as in 2012. Nonetheless, the spending index for fine jewelry and watches, at 63 by AARCs proprietary measure, was essentially unchanged this month from its spring 2013 survey and flat from one year ago.

SRC: 5% Intend to Buy Jewelry

The Shullman Research Center (SRC) determined wealthy U.S. household spending intentions on 14 specific luxury goods categories, including jewelry and watches, based upon incomes of $75,000 or more and found that 34% of adults are planning to make a luxury goods purchase in the next 12 months. Five percent planned to buy fine jewelry overall, but of that group, 10% of those shoppers in a households earning between $75,000 and $249,999, 21% earning $250,000 to $499,999 and 24% earning more than $500,000 planned to make a jewelry purchase.

Neimans Completes Merger

NM Mariposa Holdings Inc. and Mariposa Merger Sub. LLC, affiliates of Ares Management LLC and the Canada Pension Plan Investment Board (CPPIB), completed the $6 billion acquisition of luxury retailer Neiman Marcus Group Ltd. Inc. The transaction was originally announced on September 9. The luxury retailers currently outstanding 7.125% senior debentures due in 2028 were expected to remain outstanding immediately following the closing of the transaction.

Shareholders Approve Saks Merger

Shareholders of luxury retailer Saks Incorporated overwhelmingly approved the merger agreement with Hudson’s Bay Company during a special meeting this week. Hudsons Bay also operates Lord & Taylor and Home Outfitters. Based on the tabulation of the shareholder vote, the board of directors for Saks stated that approximately 99.4% of the total votes cast, which represents approximately 85.2% of the total shares outstanding as of the October 2, were voted in favor of the merger. Shareholders will receive $16 per share in cash at the closing of the transaction, which is expected to be on November 4; Saks will then become a private company and be delisted from the NYSE.

Charles & Colvard Partners With Kohls

Charles & Colvard Ltd. broadened the availability of its branded The World’s Most Brilliant Gem® through a distribution agreement with Kohl’s Department Stores. The Forever Brilliant®, finer-grade of moissanite, is now available at Kohl’s online in 14-karat gold designs of jewelry, including studs, pendants, earrings and necklaces. The partnership was designed to offer Kohl’s customers an alternative gemstone for Christmas season.

JCP Partners with Shopkick

J. C. Penney Company Inc. partnered with shopkick, a shopping app that rewards shoppers for simply walking into stores. The deal was timed for the key Christmas retail season so that JCPenney shoppers will be able to earn "kicks(TM)," a proprietary reward currency, along with special offers from the retailer when visiting any of its 1,100 store locations in the U.S. According to shopkick, other major participating retailers include Target and Macys, along with Simon Malls and electronics stores and gas stations.

De Beers Opens in Vancouver

De Beers Diamond Jewellers opened its flagship store in Canada, featuring 1,636 square feet of retail space on Alberni Street in Vancouver, British Columbia. The stores design reflects De Beers signature concept of glass and light to maximize the brilliance of diamond jewelry. De Beers has flagship locations in London, New York, Paris, Beijing, Shanghai, Hong Kong and Tokyo.

Additionally, De Beers debuted its "For You, Forever," in-store diamond engagement ring service at all locations to help shoppers design their own engagement ring. The service guides them through selecting a setting and diamond and provides various views of the finished product using an iPad.
Busiest Shopping Days

ShopperTrak expects four of the top 10 busiest Christmas-shopping days this year will fall between December 20 and 24 and it advises retailers to prepare accordingly. ShopperTrak expects U.S. consumers will make slightly fewer store visits in November and December this year, but total sales could increase 2.4%. The top shopping day will be November 29, or Black Friday, followed by the dates of December 21, 22 and 20, according to the firm. Other top shopping dates include December 14, 23, 26 and November 30.

GENERAL 	  

Rowley to Succeed Shine at De Beers

Varda Shine, the De Beers executive vice president of global sightholder sales, will be leaving the company at the end of January. De Beers appointed Paul Rowley (pictured) to succeed her. Shine will also step down as chairperson of the DTC Botswana board and deputy chairperson of the Namibia DTC board, with successors to be announced in due course, according to the firm. Rowley is currently the senior vice president of midstream operations for global sightholder sales. De Beers described him as one with a wealth of experience, having joined De Beers in 1983 and after filling a variety of senior positions in the organization. He has served on both the DTC Botswana and Namibia DTC boards and was acting CEO of DTC Botswana prior to his current role.

Spring to Head Bloomingdales

Macys Inc. appointed Tony Spring to replace Bloomingdales chairman and CEO, Michael Gould, on February 1, 2014. Spring, 48, is currently Bloomingdales president and chief operating officer and his successor will be named at a later date. Gould, 70, joined Bloomingdales as chairman and CEO in 1991. Previously, he was president and CEO of Giorgio Beverly Hills, a position he had held since 1987.

U.S., India Award Trademarks 

The U.S. Patent & Trademark Office (USPTO) awarded the trademark term Fancy A Diamond? to Penta Diamonds Ltd. of Israel with the registration number 4420932 and the trademark term The Name That Changed Diamonds Forever to Jean Paul Tolkowsky of Belgium with the registration number 4420890 on October 22.

In India, the Office of The Trade Marks Registry approved CANADIANFIRE for Ankit Gems of Mumbai, with the trademark number 1938222 and Diamonds of the Tsars for Faberge Ltd. of George Town, Cayman Islands with the trademark number 1617281 on October 7.

DGSE Settles Class Action Suit

The United States District Court for the Northern District of Texas approved the proposed class action settlement between DGSE Companies Inc. and some of its shareholders. The measure was largely expected and it ends the derivative litigation related to DGSEs previously disclosed accounting irregularities and subsequent restatement of financial results. DGSE agreed to pay $2 million plus attorneys fees to resolve the class action claims.

Verify Marketing Value From Facebook

Nate Elliott, the principal analyst at Forrester, addressed a note to Mr. Zuckerberg, or Mark Zuckerberg, the CEO of Facebook Inc., explaining that the popular social media website is failing its advertisers. Forresters marketing research report titled Why Facebook Is Failing Marketers, which retails for $499, reportedly delves into why 395 marketers and ebusiness executives from the U.S., Canada and the U.K. concluded that Facebook offers less business value than any other digital marketing channel.

However, Yahoo! Inc.s Daily Ticker Show reported from the report that only a small difference existed across a scale of 1 to 5, between the six major marketing channels with Google the best at 3.84, LinkedIn at 3.81, Yahoo! at 3.54, Facebook at 3.52, Twitter at 3.48 and MSN at 3.28. Nonetheless, Elliott explained that Facebook fails to drive genuine engagement between companies and their customers, it teases marketers with promises that it doesnt deliver and only a small percentage of brands posts make fans feed.

Facebook scoffed at the report calling it illogical and irresponsible.
Traders Face Smuggling Charges

Shenzhen customs officials reportedly seized diamonds worth $49 million and arrested 19 diamantaires from Surat and Mumbai, charging the traders with smuggling. In 2010, 21 Indian diamantaires were also arrested on similar charges, subsequently 12 diamantaires were released. The current operation was allegedly conducted in September and did not involve any members of the Shanghai Diamond Exchange (SDE), according to Chinese media reports.

MINING 	  

ALROSA Opens IPO

ALROSA raised about $1.3 billion (RUB 41.3 billion) during its public offering on Monday as shares opened at RUB 35, or $1.10 per share, on Moscow’s MICEX Stock Exchange. The share price, which was at the lower end of estimates, implied a market capitalization of $8.12 billion. Following the offering, Russia now owns 43.9% of ALROSA, Yakutia Republic owns 25% and the Yakutia municipalities hold an 8% share.

ALROSA is the largest diamond mining company by volume production and reported that revenue rose 7% year on year to $2.55 billion in the first half of 2013, but profit fell 10% to $453 million. Based upon Russian Accounting Standards, ALROSA updated its nine month profit to $713 million, an increase of 2.8%, and reported a revenue increase of 10.4% to $3.13 billion.

Catoca to Mine in Zim

Angolas Catoca will begin diamond exploration in two Zimbabwe fields in 2014, as per an agreement signed by the two countries. Angola agreed to provide research, exploration, technical and technological support to Zimbabwe and the agreement could also pave the way to explore other minerals as well.
North Arrow Completes Summer Phase

North Arrow Minerals Inc. completed the latest phase of exploration work on its 11,500-hector Redemption diamond project in the Northwest Territories of Canada. North Arrow Minerals conducted an airborne gravity gradiometry (AGG) survey, bathymetric surveys and till sampling. Final processed data for the AGG survey were received in early September and preliminary interpretation identified a number of priority gravity anomalies that were well located with respect to the up ice extent of the South Coppermine kimberlite indicator mineral train. Modeling work is ongoing, however, 32 targets have already been identified to date.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. shares were mostly higher except for Birks (-5%), Charles & Colvard (-22%), Signet (-1%) and Sothebys (-2%). Kering (-3%) led European declines, Goenka (-5%) and Titan (+10%) marked the spread in India, while mining companies were volatile with Firestone (+30%) and Rockwell (-22%) swinging to extremes. View the extended stock report.

Oct. 31 Oct. 24 Chng.
$1 = Euro 0.740 0.720 0.020
$1 = Rupee 61.60 61.45 0.1
$1 = Israel Shekel 3.53 3.52 0.01
$1 = Rand 10.04 9.76 0.28
$1 = Canadian Dollar 1.04 1.04 0.00

Precious Metals
Gold $1,325.20 $1,347.30 -$22.10
Platinum $1,449.00 $1,448.00 $1.00

Stock Indexes Chng.
BSE 21,164.52 20,725.43 439.09 2.1%
Dow Jones 15,545.75 15,509.21 36.54 0.2%
FTSE 6,731.43 6,713.18 18.25 0.3%
Hang Seng 23,206.37 22,835.82 370.55 1.6%
S&P 500 1,756.54 1,752.07 4.47 0.3%
Yahoo! Jewelry 995.66 988.70 6.96 0.7%

Rapaport Weekly Market Comment Nov. 8, 2013

U.S. trading extremely price point conscious with strong demand for commercial qualities. Polished markets cautious as RapNet Diamond Index (RAPI) for 1 ct. -1.8% in Oct. New York/Israel Diamond Week attracts many sellers. Indian market closed for Diwali with reports of weak gold and diamond jewelry retail sales. Rough prices expected to fall. Berkshire Hathaway 3Q jewelry, furnishings revenue +18% to $944M, operating earnings +33% to $48M. Shrenuj & Co. 2Q sales +41% to $188M, profit +32% to $4M. Sarin 3Q revenue +48% to $17M, profit +22% to $3M. Trans Hex 1H sales -21% to $25M, loss of $5M. Botswana takes over diamond business from De Beers as sightholders converge on Gaborone.

RapNet Data: Nov. 7

Diamonds 1,047,650
Value $6,843,089,984
Carats 1,179,390
Average Discount -27.98%

www.rapnet.com
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RAPAPORT ANNOUNCEMENTS
November
11-19
Mon-Tue

Rapaport Jewelry Sale 

New York

www.rapaportauctions.com
November
12-20
Tue-Wed

Rapaport Single Stone Auction

New York & Israel
View details.

QUOTE OF THE WEEK

We believe that through branding, Shrenuj & Company has been able to not only insulate the consumer from price volatility but also drive them towards perceiving jewelry as a style statement and lifestyle product, without denying the inherent value of gold, silver or diamonds as assets. We also believe that many markets remain underexposed to branded jewelry products and we have potential to extend our footprint into these markets.

Shreyas K. Doshi | Shrenuj & Company

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, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

Polished Diamond Prices Drop

The RapNet Diamond Index (RAPI™) for 1-carat certified diamonds fell 1.7% in October. RAPI for 0.30-carat diamonds rose 0.4%, while RAPI for 0.50-carat diamonds increased 0.2% but RAPI for 3-carat diamonds declined 0.7%.

Polished prices softened due to weak global demand and tight market liquidity. U.S. retail buyers are delaying inventory purchases for the Christmas season amid persistent price uncertainty and diminished consumer confidence. Indian diamond traders faced uncertainty prior to the Diwali festival that began on November 1 amid unconfirmed reports that the government may raise the import duty on polished diamonds from 2% to 5%. Initial reports about Diwali signal a slump in gold and diamond jewelry demand.

Liquidity in India’s manufacturing sector is tight due to low profit margins and high rough prices with weaker domestic demand throughout 2013. Rough diamond trading on the secondary market remains quiet with most De Beers boxes selling for discounts or with long-term credit. Polished diamond trading is expected to improve before the end of the year influenced by a late surge in U.S. Christmas demand and strong, selective competition to source the right “in-demand” goods. Forecasts for the season remain below that of previous years.

RETAIL & WHOLESALE 	  

Shrenuj & Co.s Profit +33%

Shrenuj & Company Limited reported that revenue rose 40% year on year to $350 million for the first fiscal half that ended on September 30. Profit jumped nearly 33% to $6.8 million. The companys second quarter revenue surged 41% to $188 million and profit increased 32% to $4.1 million. Shrenuj & Company explained that revenue grew during the first six months of the fiscal year despite a fairly challenging market and a highly volatile currency rate as the rupee fell to historically low levels against the dollar.

In the first half, the company registered its highest productivity level in the diamonds and jewelry units along with increased throughput and highly improved operational efficiencies, it stated.

Berkshires Profit +29%

Berkshire Hathaway Inc. reported that revenue improved 13.4% year on year to $46.541 billion for the third quarter that ended on September 30. Costs and expenses rose 11.5% to $39.163 billion. Earnings jumped 28.9% to $5.053 billion. Without providing hard totals, Berkshires retailing segment experienced stronger performance, primarily the result of having included revenue and earnings from the Oriental Trading Company, which Berkshire acquired in November 2012, and improved comparative results from the home furnishings and jewelry business groups, according to the company.

Berkshire operates four home furnishings businesses (Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s), three jewelry businesses (Borsheims, Helzberg Diamonds and Ben Bridge Jewelers), See’s Candies, Pampered Chef and Oriental Trading Company. Retail segment revenue increased 18.1% year on year to $944 million and operating earnings rose 33.3% to $48 million.

Michael Kors Profit +49%

Michael Kors reported that revenue from retail and licensing operations surged 38.9% year on year to $740.3 million for the second quarter that ended on September 28. Comparable-store sales increased 23%. Income skyrocketed 49% to $145.8 million. By region, revenue across North America jumped 31% to $618.3 million, while sales in Europe more than doubled to $114.1 million. Revenue from other regions increased 64% to nearly $8 million. Retail segment sales rose 47% to $355.6 million, wholesale revenue was up 30% to $351.9 million and licensing revenue improved 65% to $32.9 million.

Charles & Colvard Reports a Loss

Charles & Colvard Ltd. reported that revenue rose 35% year on year to $6.858 million for the third quarter that ended on September 30. However, costs and expenses surged 60.8% to $7.985 million and the company recorded a loss of $1.21 million compared with a profit of $123,625 one year ago.

Nonetheless, Charles & Colvard had no outstanding debt as of September 30 and cash and liquid investments totaled $6.7 million compared with $12.4 million on December 31, 2012. Inventory, including long-term and consigned inventory, was $40.4 million at the close of the quarter, compared with approximately $32.8 million at the end of 2012.

U.S. Chain-Store Sales +4%

U.S. chain-store sales rose 4.1% year on year in October, according to the International Council of Shopping Centers (ICSC). The increase was preliminary and excluded the Gap stores. ICSC determined that U.S. retail trends seemed to be getting back on track. The November sales outlook is higher, given easy comparisons (sales fell in November 2012) and one extra shopping day as many big box retailers will open on Thanksgiving Day. ICSC expects November sales to improve 3.5% to 4.5%.

Kingold to Build Jewelry Park

Kingold Jewelry Inc. acquired the operating rights for 66,666 square meters (717,587 square feet) of industrial land to develop the Wuhan Kingold Jewelry International Industry Park in the Jiangan district of China for $164 million. Kingold expects construction to be completed by mid-2015 and the entrance to the sprawling facility will be at No. 12 Han Huang Road, JiangAn District, Wuhan, a premier section on the north shore of the Yangtze River.

The Wuhan Kingold Jewelry International Industry Park is intended to provide 2.07 million square feet of floor space where businesses and trading activity can mingle with manufacturing, wholesale, and retail shopping. Kingold will relocate part of its production facility to this industrial park.

Pandora Moves Outlook Higher

Pandora continues to bring in new designs and move inventory quickly, which the retailer cited as the reason to increase fiscal year guidance. This week it added the Essence Collection, marking the eighth new jewelry series launched this year. Pandora stated that revenue continues to improve in all regions as new collections increase store sales, and it now anticipates fiscal year sales of about $1.6 billion, up from the previous estimate of $1.4 billion. Pandora reported revenue of $1.2 billion in 2012 and profit of $211 million.

De Beers Adds Third Store in Hong Kong

De Beers Diamond opened its third Hong Kong store, this one located in Times Square in Hong Kongs Causeway Bay district. Hong Kong is a key market for De Beers. The store, which is equipped with De Beers Iris technology, will debut four new designs from the Imaginary Nature collection, including a pendant, a pair of earrings, a ring and a statement necklace. Three high-end jewelry pieces will also be exhibited exclusively at the Times Square store during November.

Gitanjali Opens 103rd Store

Gitanjali Jewels opened in Gaya, 100 kilometers south of Patna, marking the companys 103rd location. The new store was designed with a strong focus on Indian ethos and aesthetics, according to the group. The retailer prepared grand opening special offers for diamond jewelry and on making charges for gold jewelry. Gitanjali Jewels sells jewelry under the Asmi, Nakshatra, D’damas, Gili, Diya, Parineeta, Sangini, Nizam, Ananya & Gitanjali gold brand names.

Appeal for Diamonds Improves

ASSOCHAM reported an emerging appeal for diamonds and platinum across Indias urban cities early on in the Diwali festival. The groups survey of jewelers noted that 76% were focusing their marketing efforts on platinum and diamonds this year for the festive occasions rather than traditional gold and silver jewelry. According to ASSOCHAM, the share of platinum and diamond jewelry is likely to capture as much as 35% of the current gold jewelry market share by 2015.

GENERAL 	  

USPTO Assigns Trademarks

The U.S. Patent & Trademark Office (USPTO) assigned the trademark term A Forever Moment Deserves a Forever Symbol to the Merit Diamond Corporation of Florida on October 29 with the registration number 4426763. The USPTO also approved the trademark Leo Hamel Fine Jewelers & Jewelry Buyers for Leo Hamel Fine Jewelers Inc. of San Diego, California on October 29 with the registration number 4424825.

FinCEN Encourages Info Sharing

The Financial Crimes Enforcement Network (FinCEN) created a fact sheet on section 314(b) of the USA PATRIOT Act that provides financial institutions, including those dealing in precious metals and gems, the ability to share information with one another. The guides fall under a safe harbor that offers protection from liability in order to better identify and report potential money laundering or terrorist activities. The fact sheet in PDF is available here.

UN Praises M23 Peace Deal

The United Nations (UN) special envoy for Africa’s Great Lakes region welcomed an announcement by the M23 rebel group that it is ending the insurgency against the diamond-rich Democratic Republic of the Congo (DRC). The agreement reestablishes state authority in areas previously held by the M23. The envoy also welcomed the commitment of the DRCs government to end combat and complete steps agreed to as part of the Kampala Dialogue.

Nonetheless, UN officials deplored the activities of other armed groups in the region, including Mayi Mayi, the FDLR, the National Army for the Liberation of Uganda (NALU) and the Allied Democratic Forces (ADF).

UBM Holds Gems Fair in Kolkata

UBM India is organizing its first Kolkata Jewellery & Gem Fair, a three-day business-to-business industry trade fair scheduled for January 11 to 13. Organizers anticipate approximately 6,000 buyers and attendees and 160 exhibitors, including loose diamond and gold jewelry dealers. The fair will be held at the Milan Mela Exhibition Complex at Science City, Kolkata and serve as a platform for domestic and international exhibitors to showcase signature designs and products in this eastern city.

MINING 	  

Trans Hex Reports a Loss

Trans Hex reported a loss of $5.3 million for the six months that ended on September 30, compared with a profit of $3.2 million one year ago. Sales from the groups South African operations fell 21% year on year to $25.5 million, as production levels dropped and fewer special-size (large) stones were recovered. Diamonds sold during the period achieved an average price of $1,028 per carat, 14% lower compared to the same period in 2012.

Paragon Secures New License

Paragon Diamonds was issued a prospecting license that is valid through September 2016 for a 442-square-kilometer area in the Kgalagadi District of southern Botswana. The license may be renewed twice for two year periods provided that 50% of the area is relinquished at each renewal, giving a total validity of seven years. The licensed area is on the northern flank of the Tsabong kimberlite field, with the closest kimberlite pipe approximately 8 kilometers south.

Rio Tinto Concludes Tender

Rio Tinto held a “specials” diamond tender, which offered fine, large rough diamonds from its three operating diamond mines. The tender featured sizes greater than 10.8 carats, included 104 parcels of diamonds and highlighted strong demand for large fancy cognac diamonds. The most valuable diamond was a 74 carat diamond from the Murowa mine in Zimbabwe. The mining company didnt provide price information.

Debswana to Review Cut-9 Extension

Operators of the Jwaneng mine are seeking approval for a new project, known as Cut-9, to place before Debswanas board next year. Cut-9 is estimated to involve moving 1 billion tonnes of ore and take the mine to a depth of 850 meters. In 2010, Debswana began work on Cut-8, a major extension project intended to stretch Jwanengs life into 2025. Debswana invested $3 billion in the project, which is expected to yield 100 million carats worth $15 billion over the life of the mine.

ECONWATCH 	  

Diamond Industry Stock Report

Birks (+24%) led gainers but overall U.S. shares were mostly lower and European shares were mainly flat. Indian shares mixed with Goenka (-25%) and Vaibhav (+13%) defining the spread. ALROSA was flat one week after debut, Peregrine (-12%) and Firestone (-17%) led losses, while Rockwell (+16%) and Gemfields (+12%) extended their gains in mining shares. View the extended stock report.

Nov. 7 Oct. 31 Chng.
$1 = Euro 0.746 0.740 0.006
$1 = Rupee 62.87 61.60 1.3
$1 = Israel Shekel 3.54 3.53 0.01
$1 = Rand 10.30 10.04 0.26
$1 = Canadian Dollar 1.05 1.04 0.01

Precious Metals
Gold $1,307.60 $1,325.20 -$17.60
Platinum $1,448.00 $1,449.00 -$1.00

Stock Indexes Chng.
BSE 20,822.77 21,164.52 -341.75 -1.6%
Dow Jones 15,593.98 15,545.75 48.23 0.3%
FTSE 6,697.22 6,731.43 -34.21 -0.5%
Hang Seng 22,881.03 23,206.37 -325.34 -1.4%
S&P 500 1,747.14 1,756.54 -9.40 -0.5%
Yahoo! Jewelry 974.02 995.66 -21.64 -2.2%

Rapaport Weekly Market Comment Nov. 15, 2013

Indian Diwali retail sales below expectations. NY/Israel diamond week attracts over 1,000 dealers and improves market sentiment. De Beers reduces prices 3-5% at inaugural Botswana sight. Exelco sells Botswana factory to Signet Jewelers. EFD drops non-profitable sightholder status. Improved demand for Russian rough below 1.5ct. Gokhran plans to buy $107M rough through auctions. Sotheby’s Geneva sells $199.5M (92% by lot) with oval, 59.6ct., fancy vivid pink, IF diamond sold to Isaac Wolf for $83M ($1.4M/ct.). Christie’s Geneva sells $125M (89% by lot) with pear, 14.82ct., fancy vivid orange, VS1 diamond sold for $36M ($2.4M/ct.).

RapNet Data: Nov. 14

Diamonds 1,057,728
Value $6,903,058,717
Carats 1,191,636
Average Discount -27.93%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

November
11-19
Mon-Tue

Rapaport Jewelry Sale 

New York

www.rapaportauctions.com
November
12-20
Tue-Wed

Rapaport Single Stone Auction

New York & Israel
View details.

QUOTE OF THE WEEK
The Pink Star (renamed the Pink Dream) is a true masterpiece of nature. Its immense importance was reflected in Geneva in the strength of the bidding and we are thrilled that the record price it achieved ($83,187,381) earned it a place in history. The record sale total ($199,512,930) is a further testimony to the strength and depth of the diamond and jewelry market.

David Bennet | Sothebys Europe

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, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

New York Bustles With Activity

Geneva was not the only hotbed of activity this week as New York hosted its second Israel Diamond Week at the Diamond Dealers Club. The four-day event attracted 200 exhibitors and nearly 1,000 suppliers, buyers and a handful of retailers combined, creating an exuberant level of energy on the Clubs trading floor. Overall, business was ok with nearly all suppliers who spoke with Rapaport News agreeing that establishing networking connections for future sales made attendance worthwhile, even if actual receipts were less than expected or hoped. Others observed a business environment that is extremely price conscious at the moment; many buyers were just shopping and there were no impulse purchases, according to sellers.

Buyers frequently mentioned that prices were still too high and that sellers were holding firm. Israeli dealers expected more retailers at the event, and traders from both bourses surmised that sales may have been stronger if this event had been held in early October when retailers were in the midst of planning Christmas inventory.

Specific demand for diamonds during Israel Diamond Week primarily centered on 0.50-carat sizes and 1.00-carat to 1.50-carat in I-J colors. There was good but selective demand for rounds in the 1.50-carat to 2.00-carat sizes, if the price was right. Requests for larger sizes (above 5.00 carats) were spotty; however, some sales were made of stones above 10 carats. Exhibitors presented a large assortment of fancies, but demand was rather mixed with smaller sizes doing better, especially in pears, while larger goods were overlooked; and colored stones, primarily pinks and blues, sold very well under the carat. Yellow fancies were in fair demand and in very good supply.

Gaborone Concludes Its First De Beers Sight

De Beers Group of Companies celebrated the start of its rough diamond sales in Gaborone, Botswana this week, marking the end of a two-year long relocation program from London. The company reduced prices for goods between 3% and 5%. De Beers stated that 200 representatives attended the sight in its new $35 million state-of-the-art facility. De Beers relocation is expected to serve as a catalyst for economic growth across southern Africa, with the region now the world’s primary source of rough diamonds sales, creating further employment opportunities in ancillary services such as banking, security, IT and supply chain management. De Beers has sourced furniture, equipment and other products and services from local companies, providing immediate economic benefit to domestic suppliers.

One in Five to Buy Jewelry or Precious Metals Gift

According to the National Retail Federation (NRF), 23.3% of U.S. shoppers who buy gifts for Christmas plan to purchase jewelry or a precious metals accessory. The percent of would-be jewelry buyers was highest (33.3%) for the age group of 18 to 24 and lowest (15.9%) for those older than 65. In recent years, 22.5% chose jewelry as a gift they planned to purchase in 2012, while 21.2% chose jewelry in 2011 and 20.3% chose the item in 2010.

In terms of product categories that compete with jewelry, 60.7% of shoppers plan to buy clothing as gift, followed by gift cards (59.2%), books/DVDs (48.8%), toys (44.3%), electronics (33%), food/candy (32.7%) and personal care items (25.4%). The NRF observed that more than half of consumers have begun gift shopping already, but that the consumer wallet has turned tighter and therefore shoppers expect to spend slightly less this year on gifts.

Meanwhile, the International Council of Shopping Centers (ICSC) determined that 7.1% of consumers would purchase jewelry for the Christmas season. Pearls, sparkly watches, boxed jewelry sets and wearable technology ranked high as gift items and Michael Kors, Pandora and Alex & Ani were the jewelry brands to watch based on consumer intentions to spend with those retailers.

RETAIL & WHOLESALE 	  

Pink Diamond Sets Records for Sothebys

Sothebys autumn sale of magnificent jewels in Geneva set a world record for the Pink Star, renamed the Pink Dream, a 59.60-carat, internally flawless fancy vivid pink, type IIa diamond that sold for $83,187,381, or $1,395,761 per carat, to diamond-cutter Isaac Wolf. Sothebys auction achieved the highest jewelry sale in history at $199,512,930 against a presale estimate of $112.5 million to $153 million and was 92% sold by lot. The Walska Briolette Diamond brooch by Van Cleef & Arpels, featuring a 96.62-carat yellow diamond, sold for $10,555,778, a record for any jewel by the famed brand. A set of earrings (23.77-carat and 23.78-carat) sold for $9,213,009 and a 5.04-carat mixed-cut fancy vivid blue diamond ring sold for $6,649,541, rounding out the top five diamonds.

Christies Orange Sells for Record Price

Christies Geneva autumn sale of magnificent jewels totaled $125,360,131, against a presale estimate of $70 million to $80 million, and was 89% sold by lot. The top lot was The Orange, an extremely rare, 14.82-carat, VS1, fancy vivid orange, pear-shaped diamond which sold for $35,540,611 or $2,398,151 per carat, setting a world record price per carat for any colored diamond at auction and the world auction record for a fancy vivid orange diamond. Overall, 22 lots achieved over $1 million, including the Patiño emerald and diamond necklace by Cartier that fetched $9.9 million, a seven-strand natural pearl necklace which sold for $9 million (CHF.8.3 million) and a 58.29-carat cushion-shaped sapphire mounted in a multi-gem Côte d’Azur brooch designed by Anna Hu that sold for $4.5 million.
U.S. Jewelry Sales +5%

Jewelry sales in the U.S. during September rose 5.3% year on year, according to preliminary government figures, maintaining an annual, running total of about $69.6 billion. Sales of watches increased 5.9%, representing an annual total of about $9.3 billion. Meanwhile, the U.S. consumer price index (CPI) for jewelry rose 0.2% year on year in September to 181.01 points. Comparatively, and across all consumer product categories, real personal consumption increased 2.7% in September and the CPI for all product categories combined increased 1.2% year on year.

U.S. jewelry store sales growth has performed slightly better than overall jewelry sales in recent months. As reported earlier on Rapaport News the latest data on jewelry store sales, which was collected for August, increased 6.9% year on year to $2.389 billion and store sales for the first eight months of 2013 rose 9.2% to $19.652 billion.

Richemonts Profit +10%

Richemont reported that profit grew 10% to $1.59 billion (EUR 1.19 billion) during the six months that ended on September 30, while revenue increase 4% at actual exchange-rates and by 9% at constant exchange-rates to $7.12 billion. Jewelry sales rose 2% year on year to $3.57 billion, with solid performance from Cartier and Van Cleef & Arpels. Demand for Cartier’s watch collections was broadly in line with the prior year at constant exchange-rates, according to the company. Specialist watchmaker sales rose 9% to $2.12 million. By region, sales rose 10% in Europe, 4% in the Asia Pacific region and 17% in the Americas.

Birks Loss Grows to $8M

Birks Group Inc. reported that sales climbed 2.2% year on year to $57.3 million for the second quarter that ended on September 28. Same-store sales rose 11%. Inventory rose 2.8% year on year to $158.2 million. Revenue for the first half increased 2% to $127.41 million and cost of sales jumped 6% to $75.25 million. Gross margin fell to 40.9% of sales from 43.2% of sales in 2012. Birks reported a loss of $7.74 million, up from a loss of $5.69 million one year ago.

Birks Group initially announced its plans this past month to open a Maison Birks mono-brand store in the Xanadu Plaza in Beijing, but it told shareholders today that it will be actively reviewing alternative locations in either Beijing or Shanghai in order to open a Maison Birks in China during the 2014 calendar year.

Pandoras Profit +61%

Pandoras revenue improved 25.7% year on year to $406 million (DKK 2.255 billion) for the third quarter that ended on September 30. Profit surged 61% to $110 million, gross margin rose to 66.2% compared with 64.1% one year earlier. Pandora dramatically improved free cash flow to $65 million compared with a deficit of DKK 88 million. The jeweler reduced inventory by 16.6% to $289 million. While strong all around, the level of growth was uneven across Pandoras geographies with sales increasing only 7.6% year on year to $178 million in the Americas, but they skyrocketed 46.5% to $185 million in Europe and gained 37.7% in Asia-Pacific at $43 million.

Online Jewelry Sales Rise

U.S. ecommerce retail sales rose 13% year on year to $47.49 billion for the third quarter that ended on September 30, according to comScore Inc. In addition, retail spending from smartphones and tablets, which comScore defined as m-commerce, added $5.8 billion for the quarter, up 26% year-on-year, for a total digital commerce spending total of $53.2 billion in period.

Online product categories that performed best in the third quarter, all of which improved at least 14% from one year ago, included the jewelry and watch category as well as digital content and subscriptions, apparel and accessories, consumer packaged goods and consumer electronics. Ecommerce accounted for 9.4% of consumers’ discretionary spending in the quarter, the highest share on record, according to comScore.

Sothebys Narrows 3Q Loss

Sothebys revenue rose 57.6% year on year to $107.86 million in the third quarter that ended on September 30. Operating expenses increased 33.7% to $142.23 million. The auction house recorded a net loss of $30.13 million compared with a loss of $32.57 million one year ago. Due to the seasonal nature of the art auction market, Sothebys third quarter financial results have historically reflected a loss. During the period, Sothebys experienced a sizable revenue increase from private sale commissions, but this was partially offset by higher operating expenses, according to the firm.

Luk Fook Acquires Stake in CGS

Luk Fook Holdings signed a memorandum of understanding with Hong Kong Resources Holdings (HKRH) to buy a 50% stake in its fully owned subsidiary, China Gold Silver Group (CGS), for $38.8 million (HKD 301 million). The acquisition would increase Luk Fooks jewelry store network by 400 stores, while CGS would benefit from the companys assistance in developing its 3D Gold brand. Luk Fook had 1,188 points of sale as of September 30.

Van Cleef & Arpels, Cartier Open in NY

Van Cleef & Arpels and Cartier boutiques opened at the Americana Manhasset Mall on Long Island, New York in time for the Christmas season. IBEX Construction custom-built and Callison designed the two new jewelry boutiques. Van Cleef & Arpels opened recently as part of the London Jewelers collection of stores at the mall -- a newly developed concept that allows each store to be an individual property from the outside, while allowing customers to move freely from one to the next.

The new Cartier boutique created a warm, inviting space with exotic woods, built-in display cases, general cove lighting and a grand chandelier. In 2012, IBEX built a 4,500-square-foot TWO by London store, the London Jewelers’ engagement shop at the Americana Mall and the brainchild of Scott Udell, of London Jewelers. TWO by London is first of its kind in the U.S., providing a new, unique way to shop for engagement rings, wedding bands and wedding day jewelry. IBEX is now building the new David Yurman location at the mall

Signet Acquires Polishing Factory

Signet Jewelers Ltd. acquired a diamond polishing factory in Gaborone, Botswana from H&A Cutting Works (Botswana) (Proprietary) Ltd., a subsidiary of Exelco International Limited. Financial terms of the deal had not been disclosed. With this acquisition, Signet secured additional, reliable and consistent supply of diamonds and achieves operating efficiency. Diamonds and diamond jewelry account for more than 75% of Signets sales in the U.S.

Rio Tinto Expands Fashion Diamonds Promo

Rio Tinto launched "The Fashion of Diamonds" marketing initiative in Shanghai, China, which consists of 13 jewelry collections comprised of more than 90 pieces of diamond jewelry. The jewelry line incorporates diamonds from Rio Tintos Argyle mine in Australia and was designed by five Chinese designers who collaborated with the company to create the collection based on market research. Rio Tinto Diamonds launched its China strategy in 2010 at the Shanghai World Expo. Since then, the company has focused on developing trade and retail partners in the diamond fashion jewelry market in China.

GENERAL 	  

De Beers Testing Melee Screening Equipment

De Beers Group reminded sightholders this week that a consumer’s desire for diamonds is the only source of value for the diamond and jewelry industry. Therefore, De Beers view of synthetic diamonds remains as always -- it is possible that appropriately disclosed synthetics can find a happy and legitimate place in the diamond and jewelry industry, primarily in the low-value, under $200 market; however, passing off a synthetic stone as a natural diamond threatens consumers’ confidence in diamonds and the practice is unethical and fraudulent.

While De Beers stated that undisclosed trading of synthetic diamonds is confined to a very small portion of the global industry, due to heightened concerns across the trade recently, the company developed a guide Undisclosed Synthetics Booklet. De Beers already has the technology to detect all synthetics, but it is testing a new Automated Melee Screening (AMS) machine that it expects to roll-out in the first half of 2014; meanwhile, sightholders can test samples of melee parcels with DiamondSure to reduce the risk of purchasing undisclosed synthetics, according to the firm.

De Beers best practice principles (BPPs) prohibit the sale of undisclosed synthetics and vowed work with industry bodies to identify those operating without disclosure. Test all diamonds and should undisclosed synthetics appear, De Beers warned firms to take immediate action, report to relevant organizations, including bourses, trade associations and potentially law enforcement agencies. De Beers sightholders are contractually obligated not to sell undisclosed synthetics and doing so is a material breach of the BPPs and places the contract at great risk. Ignorance is no excuse.

DMIA Calls for Meeting on Synthetics

The Diamond Manufacturers & Importers Association of America (DMIA) issued a statement saying that it is imperative for the industry to respond immediately and forcefully to the undisclosed synthetic drama. The group stated that one of the major problems in attacking this issue is the lack of cohesion from stakeholders, all of whom are rightfully very concerned. DMIA called upon on the international and domestic leaders from the industry, law enforcement and laboratories to physically gather in New York as soon as possible to finalize the best approach. DMIA called players together in May 2012, saying at that time that inaction on undisclosed synthetics was unacceptable and demanded an industry commitment to criminally prosecution those who violate ethical procedures.

GJEPC Addresses Synthetic Concerns

Indias Gem & Jewellery Export Promotion Council (GJEPC) took steps to address concerns about synthetic diamonds being mixed with natural stones. The GJEPC and Bharat Diamond Bourse (BDB) immediately attended to recent cases and initiated an investigation on behalf of two diamond brands. GJEPC formed a Natural Diamond Monitoring committee along with BDB and others to protect the interests of the natural diamond industry, vowed to enhance consumer confidence through proper disclosures, segregate naturals from synthetics and define policies to avoid misrepresentation. GJEPC hired A. T. Kearney and Bonas & Co. to help establish a trading framework and will set up a Diamonds Quick Detection and Resource Centre at BDB within the next month.
WDC Amends Bylaws

The World Diamond Council (WDC) approved amendments to its bylaws, as well as a code of conduct that lists core values according to which members are guided. A steering committee, which was established by the WDCs board in July 2012, will examine the restructuring of the WDC in terms of membership, financing and administration, so as to upgrade the functioning and efficiency of the organization in its second decade of operation.

New bylaw requirements direct the board to represent the geographical diversity of the entire diamond supply chain; all WDC members will pay annual dues with a fee structure that is formulated by the organizations finance committee; limit a single two-year term for the WDC president, following which he or she will be succeeded by the sitting vice president. The president and vice president will be elected by the new board of directors, for which elections are scheduled at the end of 2013.

Chandler Joins Gemvara

Gemvara named Susan Chandler as its new chief merchandising officer. Chandler has more than 20 years of experience working with luxury goods, fine jewelry and fashion jewelry, and most recently served as the senior vice president and general merchandise manager at David Yurman. At Gemvara, Chandler will be responsible for developing and implementing a merchandising strategy for growth, direct design, curate merchandise and oversee the entire product assortment.

Floyd Joins JTV

Jewelry Television (JTV) signed veteran jewelry host Libby Floyd as an on-air shopping personality. Floyd brings more than 15 years of experience to the network, has contributed to USA Today as a jewelry expert, and worked at ShopNBC, USN and The Shopping Channel, according to her LinkedIn profile. She earned the Accredited Jewelry Professional (AJP) designation from the Gemological Institute of America (GIA) and graduated from the University of South Carolina where she received the Alumni of the Year Award in 2007 for her accomplishments in television. JTV is privately-held company and broadcasts high definition programs 24 hours a day to more than 80 million unique households in the U.S.

Moses, Tannenbaum Join GIA Board

The Gemological Institute of Americas (GIA) board of governors inducted Thomas M. Moses, who was also named executive vice president and chief laboratory and research officer for GIA, and Elliot Tannenbaum, senior principal of Leo Schachter Diamond Group (LS Group), during the board’s November 2013 meeting in Carlsbad, California. Moses and Tannenbaum join 16 other governors in directing the strategy of the Institute and serving as stewards of the public interest.

MINING 	  

Petras Revenue +27%

Petra Diamonds revenue rose 27% year on year to $65.1 million during the companys first quarter that ended on September 30, as higher production compensated for weaker rough diamond prices. The company sold 588,233 carats for an average price of $110 per carat, down 31% from one year earlier. Production rose 25% to 816,735 carats during the first quarter, despite challenging labor conditions following industrial action at its South Africa mines.

Petra reported that its cash balance grew to $55.3 million as of September 30, compared with $26.2 million at the start of the quarter. Outstanding debt dropped to $2.1 million from $74.8 million. The company’s inventory increased to 483,557 carats valued at $43.2 million, compared with 348,403 carats worth $31.5 million on June 30.

Lucara Returns a Profit

Lucara Diamond Corporations revenue more than tripled to $42.1 million in the third quarter that ended on September 30. The company held two sales during the ‎period, achieving an average price of $625 per carat. Lucara posted a profit of $15 million compared with a loss of $3.4 million the previous year. At the end of the quarter, Lucara had $33.6 million cash on hand compared with $11.1 million one year ago. The companys cash position was further strengthened following the receipt of $10.9 million of proceeds from its late September tender. Lucaras outstanding debt of $16.6 million was subsequently repaid after the quarter, fully repaying the companys $50 million debenture. Production at Karowe rose 24% to 113,881 carats, while the company sold 81,357 carats from the mine.

Mountain Province to Raise $25M

Mountain Province Diamonds Inc. announced a non-brokered private placement to raise approximately $25 million through the placement of common shares at a price of $5 per share. The companys major shareholder, Bottin (International) Investments Ltd. (controlled by Dermot Desmond), expects to be subscribing, according to the explorer. The private placement is expected to close on or before November 22. The proceeds will be used to support Mountain Provinces capital expenditures at the Gahcho Kué diamond project, the 2014 Tuzo Deep drill program and for general corporate purposes.

Stornoway to Raise $9M

Stornoway Diamond Corporation entered into an amended agreement with Dundee Securities Ltd. as lead underwriter, together with a syndicate including Scotiabank and Desjardins Securities Inc., for a private placement financing on a bought deal basis of 9.2 million flow-through common shares for gross proceeds of $8.74 million. In addition, Stornoway granted the underwriters the option to purchase up to an additional 1,380,000 flow-through shares at 95 cents per share to cover over-allotments.

ECONWATCH 	  

Diamond Industry Stock Report

Most U.S. retailers were higher, led by Macys (+10%) but Birks (-4%) results dampened an otherwise positive mood. European shares mainly lower except for Damiani (+4%). Indian shares all lower, led by Gitanjali and Goldiam (-6%). Mining shares closed across a wide spread, Lucara (+22%) capped gainers, Peregrine (-11%) led declines. View the extended stock report.

Nov. 14 Nov. 7 Chng.
$1 = Euro 0.740 0.746 -0.006
$1 = Rupee 63.05 62.87 0.2
$1 = Israel Shekel 3.52 3.54 -0.02
$1 = Rand 10.19 10.30 -0.11
$1 = Canadian Dollar 1.05 1.05 0.00

Precious Metals
Gold $1,287.60 $1,307.60 -$20.00
Platinum $1,444.00 $1,448.00 -$4.00

Stock Indexes Chng.
BSE 20,399.42 20,822.77 -423.35 -2.0%
Dow Jones 15,876.22 15,593.98 282.24 1.8%
FTSE 6,666.13 6,697.22 -31.09 -0.5%
Hang Seng 22,649.15 22,881.03 -231.88 -1.0%
S&P 500 1,790.62 1,747.14 43.48 2.5%
Yahoo! Jewelry 971.87 974.02 -2.15 -0.2%

QUOTE OF THE WEEK
The Pink Star (renamed the Pink Dream) is a true masterpiece of nature. Its immense importance was reflected in Geneva in the strength of the bidding and we are thrilled that the record price it achieved ($83,187,381) earned it a place in history.
😲
http://www.bbc.co.uk/news/business-24934297

Obrázky:

Turtle vdaka , ale včera som priradil cenu pri farebných diamantoch

Rapaport Weekly Market Comment Nov. 22, 2013

Polished market improving with good Thanksgiving holiday expectations but trading volume below previous years. Indian cutters resume operations after Diwali break. Rough trading picks up after De Beers reduces prices 3-5% at $480M Nov. sight. Letšeng 3Q sales +20% to $41M, average price +21% to $2,022/ct. Okavango to introduce contract sales in 2014. Gitanjali 2Q revenue -24% to $478M, profit -74% to $6.5M. Suashish Diamonds 2Q revenue +9% to $29M, profit +137% to $2.4M. U.S. Sept. jewelry store sales +4% to $2.3B. Michael Rae resigns as CEO of Responsible Jewellery Council. Balisi Bonyongo to replace Jim Gowans as Debswana CEO.
RapNet Data: Nov. 21

Diamonds 1,083,133
Value $6,975,625,202
Carats 1,206,893
Average Discount -27.90%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

November
19-28
Tue-Thu

Rapaport  Melee Auction 

New York & Hong Kong

www.rapaportauctions.com
December
3-11
Tue-Wed

Rapaport Single Stone Auction

New York & Israel

View details.
QUOTE OF THE WEEK
Similar to Dubai, Damas foresees no limit to advancing its position as a leader in the high-end luxury market. Under our new vision, we are furthering our brand name and image and are proud to be recognized as one of the most dynamic and prestigious international trademarks in the jewelry industry. With our rich heritage in jewelry, spanning over 100 years, our clients will continue to enjoy the same high-quality products and staff dedication.

Anan Fakhreddin | Damas

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, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	 

De Beers Lowers Prices Slightly

The De Beers November sight closed with an estimated value of $480 million, slightly higher than presight estimates as sightholders observed a slight improvement in profitability from offered goods. It was also the first full international sight to be held in Botswana after the company completed its relocation of sightholder sales from London. De Beers lowered prices by 3% to 5%, mainly on the small and commercial-quality boxes, which helped spur demand for ex-plan goods. Assortments also changed, resulting in higher values on certain boxes. Some sightholders opted to defer their allocations to December but then applied for additional goods that were not included in their initial applications (ex-plan) due to price adjustments.

While the price declines provided some relief to manufacturers, they were nowhere near the kind of adjustment required to bring profitability to the sector, sightholders stated. Some added that rough goods from ALROSA continue to offer better value on the market.

Silver Demand for Jewelry +6%

Silver prices in the first 10 months of 2013 averaged $24.51 per ounce, nearly a 21% year-on-year decline, according to the Thomson Reuters GFMS Interim Silver Market Review, and GFMS is forecasting a full year average price even lower, at $24.24 per ounce. Silver fabrication demand will grow 6% year on year both for the jewelry sector and the silverware market this year. Jewelry demand has been particularly strong in emerging markets, with demand surging in India as consumers have dramatically pulled away from buying gold, GFMS reported.

Much of silvers price decline this year was driven by factors similarly influencing the gold market and triggered by expectations that the U.S. Federal Reserve would taper back its $85 billion monthly bond and mortgage backed securities purchases. This, alongside an expectation of more attractive returns in other asset classes, prompted investors to engage in sector rotation trades away from safe haven commodities toward equities and bonds, the report noted.

China No.1 for Ecommerce Opportunity

A.T. Kearney’s 2013 Global Retail E-Commerce Index ranked China in first place for online retail market opportunity, followed by Japan, the U.S., the U.K., South Korea, Germany, France, Brazil, Australia and Canada, to complete the top 10. The group measured 186 countries for market potential and ranked the top 30. Globally, over the past five years, online retail sales have grown at a 17% annual rate, with growth particularly strong in Latin America (27%) and Asia Pacific (25%).

Developing countries featured prominently in the index, holding 10 of the 30 positions and many of these markets have been able to shortcut the traditional curve as online retail grows at the same time as physical retail becomes more organized. Mobile commerce is also growing faster in smaller markets, such as Russia and the United Arab Emirates, compared with established markets. Social Media is another factor that has a major impact on retailers, but in vastly different ways, whereas in China, shoppers are encouraged to write post-purchase reviews in exchange for loyalty points but in developed markets many online retailers, such as Amazon, mine these pre- and post-purchase reviews for insights on products, instruction manuals and supply chain issues.

RETAIL & WHOLESALE 	  

U.S. Jewelry Store Sales +4% 

U.S. jewelry store sales rose 4.2% year on year in September to $2.258 billion, with the pace of growth weaker when compared to the increase of 6.9% in August. As reported earlier on Rapaport News, overall jewelry and watch sales in the U.S. for September rose 5.3%. Better still, the consumer price index for jewelry in September was essentially flat, or up just 0.2% year on year. Jewelry store sales for the first nine months of 2013 rose 8.8% to $21.933 billion. The highest monthly total for jewelry store sales so far this year was in May at $3 billion.

Meanwhile, advanced estimates for department store sales continued to reflect difficult market conditions and slipped 3.4% year on year in October to $13.503 billion. So far in 2013, department store sales have fallen 5.1% to $132.54 billion.

Jewelry CPI Flat

The U.S. consumer price index (CPI) for jewelry was basically flat, or down by just 0.4%, year on year at 177.72 points in October; however, the reading was a full three points lower than Septembers index. The highest CPI was 183.19 points in January 2012. The average monthly CPI for the first 10 months of the year was 0.3% lower year-on-year at 177.97 points.

Gold was about 27% lower year on year in October and platinum was down by nearly 13%. The RapNet Diamond Index (RAPI), the global benchmark for polished diamond prices, dropped 5.3% year on year for 1-carat diamonds in October, the index for 0.50-carat diamonds fell 2.5% and it declined 3.3% for 3-carat stones. However, RAPI for 0.30-carat diamonds jumped 6.6%.

JCPenneys Loss Surges

J.C. Penney Company Inc.s revenue fell 5.1% year on year to $2.78 billion in the third quarter that ended on November 2; however, the retailer held cost of goods sold relatively flat from the previous year, they fell 0.8% to $1.96 billion. Comparable-store sales slipped 4.8% and gross margin fell to 29.5% from 32.5% one year ago. Operating expenses jumped 10.1% to $1.22 billion. JCPenneys net loss skyrocketed nearly 300% to $489 million.

JCPenney claimed that revenue from its online sales channel jumped 24.5% year on year to $266 million in the third quarter. Throughout its network of stores, top performing product categories were womens apparel, mens apparel and fine jewelry. JCPenney incurred $46 million in restructuring and management transition charges, cash and cash equivalents at the end of the third quarter was $1.227 billion, total available liquidity was $1.71 billion and total debt was $5.612 billion.

Gitanjalis Profit -74%

Gitanjali Gems Ltd.s revenue declined 24% year on year to $477.9 million (INR 30.04 billion) in the second quarter that ended on September 30. The companys earnings dropped 74% to $6.5 million as financing costs jumped 80% to $29 million. The company noted that gold import restrictions by the Reserve Bank of India also negatively impacted business.

Diamond sales rose 39% to $370.9 million, while jewelry sales declined 48% to $203.8 million. Intersegment revenue, which is subtracted from reported revenue, surged 215% to $99.5 million. Gitanjali intends to add platinum, precious stones and silver jewelry categories to increase its international business. This week, Gitanjali Jewels opened in Jhansi, India, marking the retailers 104th location in the country.

C Mahendra Reports a Loss

C Mahendra Exports Ltd.s revenue fell 2% year on year to $72.6 million (INR 4.5 billion) in the second quarter that ended on September 30. The company reported a loss of $4.3 million compared with a profit of $1.7 million. For the first six months of the companys fiscal year 2014, revenue rose 48% to $200.8 million, while profit declined 64% to $628,178 and expenses jumped 49% to $194.2 million.

Tara Jewels Profit -7%

Tara Jewels Ltd.s revenue, excluding bullion, rose 12% year on year to $108 million (INR 6.812 billion) for the first fiscal half that ended on September 30. The companys profit fell 7% to $3.6 million. Rajeev Sheth, the chairman of Tara Jewels, declared the companys first interim dividend of one rupee per share and confirmed that its international business continues to experience healthy demand for jewelry from large retailers.

TBZs Profit -82%

Tribhovandas Bhimji Zaveris (TBZ) revenue declined nearly 8% year on year to $51.5 million (INR 3.34 billion) and profit plummeted nearly 82% to $558,000 for the second fiscal quarter that ended on September 30. The company observed weaker consumer sentiment as gold prices and the rupee were volatile and general economic conditions remained under pressure. TBZ anticipates that Indias wedding segment will improve in the coming year, driven by a higher number of wedding days (74 days vs. 49 days in fiscal 2013), and auspicious days, which will last until end of June 2014.

Suashishs Profit Surges

Suashish Diamonds Ltd.s revenue rose 9% year on year to $28.5 million (INR 1.8 billion) during the second quarter that ended on September 30. Expenses grew 11%, however, the companys profit more than doubled to $2.4 million. During the first six months of the year, sales decreased 24% to $52.7 million, while profit grew 28% to $4.6 million.

DGSE Reports a Loss

DGSE Companies Inc.s revenue fell 17.9% year on year to $23.8 million for the third quarter that ended on September 30. Sales were negatively impacted by volatile market demand for precious metals along with an unprecedented decline in gold prices. The companys gross margin fell to 19.1% from 21.4%. DGSE reported a net loss of $1.4 million compared with a loss of nearly $500,000 one year ago. DGSE expects to be more selective with retail store openings as the fluctuations in precious metal pricing plays a strong role in the pace of its expansion plans.

Cash America Reaches Settlement With CFPB

Cash America International Inc. agreed to pay a $5 million penalty in a settlement with the Consumer Financial Protection Bureau (CFPB), without admitting or denying facts in a disclosure dispute. Cash America also agreed to set aside an additional $8 million, for a period of 180 days, to fund any further payments to eligible Ohio customers who make valid claims in connection with a reimbursement program. The company already refunded $6.4 million in connection with the program.

CFPB alleged that Cash Americas subsidiary in Ohio improperly prepared certain court documents in debt collection lawsuits, violated the Military Lending Act by overcharging loan rates on some customers and impeded a regulatory review process. Cash America stated that it corrected system errors that permitted loans to be made at higher rates and it is in the process of enhancing compliance management and implementing additional procedures and controls to address the issues.

WTJ, Stuller Expand Partnership

World Trade Jewelers (WTJ), which specializes in developing specialty jewelry collections, extended its collaboration agreement with Stuller Inc. to include the new Scrabble brand jewelry distributorship for the independent market. WTJ will maintain the jewelry licenses and provide the product development, packaging, marketing and public relations for the three jewelry brands Stuller now offers: Scrabble, Hersheys Kisses and the Sweethearts collection.

                     Okavango Plans Fixed-Term Contracts 

The Okavango Diamond Company is planning to introduce fixed-term supply contracts in 2014, Toby Frears, the companys managing director, said in Israel on Wednesday. The company currently sells via 10 online spot auctions per year, where Okavango sells about 250,000 carats of rough per auction with projected annual sales of about $400 million.

He said that contract sales will run alongside the company’s auction sales, but didnt confirm how much would be sold by either method. The company receives 12% of Debswanas rough supply and it is expected to increase to 15% by 2016. Okavango’s next sale is scheduled for the end of January 2014.

Damas Debuts New Marketing Vision

Damas rolled out a new corporate vision that is intended to drive the companys growth and global status as a market leader in luxury jewelry. One nuance to its corporate image was to change from being a famous brand in Dubai to one that is an internationally famous jewelry brand from Dubai. Damas also developed a new customer relationship management (CRM) system and launched its new website design.

Damas expects to launch more gold and diamond products, introduce international brands to feature in its stores, remodel its outlets and adopt a two-store format retail strategy. The new format will present Damas with the opportunity to offer prestigious international brands, while the Damas Collections retail outlets will continue to showcase in-house styles.

Rosy Blue, Gitanjali Receive Trademarks

The U.S. Patent & Trademark Office (USPTO) assigned the trademark Harmony Eternally In Love to Rosy Blue Jewelry Inc. of New York on November 12, with the registration number 4433334. The wording is stylized with eight oval-shaped designs intersecting to form the shape of a butterfly.

Indias Office of The Trade Marks Registry assigned the trademark Poonam Bangles to Gitanjali Gems Ltd. of Mumbai on November 18, with the registration number 1932005. Poonam Bangles refers to all forms of jewelry and watches and falls under the Class 14 classification.

GENERAL 	  

U.S. Vows to Freeze Trade Assets

The U.S. Ambassador to Zimbabwe, David Bruce Wharton, said that anyone attempting to use U.S. financial institutions in the trading of diamonds from the Marange of Zimbabwe will find their assets frozen as the law permits. Wharton told The Zimbabwean newspaper that the U.S. will not impose its position on the E.U., however, the U.S. continues to insist upon all of Zimbabwes diamonds being free of illegal activity.

The U.S. continues sanctions on the Zimbabwe Mining Development Corporation (ZMDC), the Minerals Marketing Corporation of Zimbabwe (MMCZ), Marange Resources and Mbada Diamonds, which touch all of Maranges diamonds in one way or another. U.S. businesses are forbidden to trade diamonds or minerals that fund, in any way, those companies in either rough or polished form. The E.U. lifted sanctions on ZMDC in September and diamond trading between Antwerp and Zimbabwe is expected to resume shortly.

GIA to Supply Detection Devices

The Gemological Institute of America (GIA) and the World Federation of Diamond Bourses (WFDB) will distribute synthetic diamond detection devices at bourses. Ernie Blom, the WFDBs president, and Tom Moses, GIAs executive vice president, reiterated WFDBs commitment to enforcing “zero tolerance” for non-disclosure of synthetic stones. GIAs detection assistance to member bourses will permit members to identify illegal mixes of synthetic stones with natural diamond parcels.

The Israel Diamond Exchange (IDE) told its members that the GIA would deliver a detection device in February and that it can recognize synthetic diamonds with a 97% accuracy rate. The remaining 3% of suspect diamonds are classified as "not clear" and should be sent on to GIAs laboratory.

Sproule to Replace Rae at RJC

Michael Rae, the CEO of the Responsible Jewellery Council (RJC), has resigned from his position to pursue interests nearer his home in Melbourne, Australia. Rae has served as CEO since 2006 and he will be replaced by Catherine Sproule, pictured, who will serve as interim CEO, while the organization searches for his successor.

Bonyongo to Replace Gowans at Debswana

Debswanas shareholders appointed Balisi Mohumi Bonyongo, the current chief operating officer, as its managing director to replace outgoing James Gowans on January 1. Bonyongo will be responsible for implementing the companys long-term resource development plan at Debswanas mines, which include Jwaneng, Orapa, Letlhakane and Damtshaa. He has worked at Debswana for 20 years in various professional and leadership capacities, including manager of the aquarium project at Jwaneng, corporate strategy manager at Debswanas head office and as general mine manager at Jwaneng.

MJSA Names Board

MJSA named four new directors to its board, each of whom will serve three-year terms, including Ted Doudak, Paul Fuhrman, Stephen Kahler and Thomas F. Kelly. Additionally, re-elected officers include Edward N. DeCristofaro, Ann Arnold, Darrell Warren, Stuart Lee and Michael Toback. Richard V. Powers was appointed to another one-year term as officer-at-large.

MINING 	  

Gem Diamonds Sales -31%

Gem Diamonds reported that rough diamond sales fell 31% year on year to $41.3 million for the third quarter that ended on September 30. The decrease was mainly due to its sale of the Ellendale mine before the start of 2013 to focus on its Letseng operation in Lesotho and a new project in Botswana. Gem Diamonds sold 20,405 carats from Letseng during the quarter and achieved a 20.9% year on year price improvement at $2,022 per carat.

During the quarter, Gem Diamonds recovered 25,559 carats from Letseng, representing a year-on-year decline of 5.5%. Nonetheless, the installation of four new cone crushers earlier this year improved the recovery of high-value and unbroken stones, with 13 rough diamonds valued in excess of $1 million each, 26 diamonds valued at more than $20,000 per carat and 178 diamonds in excess of 10.80 carats being recovered.

ALROSA Wins Udachnaya Bid

ALROSA reportedly won an exploration bid for the Udachnaya Pipe peripheral alluvial deposit in Yakutia, according to Interfax. The property is close to ALROSAs deposits and bid $763,000 for exploration rights. The deposit sits on a flank of the Udachnaya Pipe and reportedly has C1 category reserves of 109,500 carats, according to government data.

In other news, an ALROSA spokesperson told Interfax that it is negotiating sales contracts directly with major jewelers and auction houses, and has already signed a deal with Sothebys for the sale of unique, high-value diamonds. The spokesman said supply deals, some new, some renewed, were in the works with Tiffany & Co., Graff, Cartier and Lazare Kaplan and that ALROSA was working with the government to simplify polished diamond export procedures.

Gemfields Sale Achieves $16M

Gemfields plc. sold 4.9 million carats of lower-quality emeralds and beryl from its Kagem mine in Zambia for $16.4 million, or an average of $3.32 per carat. The auction was held in Lusaka and was 90% sold by lot. Twenty-one companies attended the auction, with 20 placing at least one bid for the 5.6 million carats that were offered. The sale brought fiscal year to date revenue to $56.4 million, surpassing $48.4 million achieved in fiscal 2013.

Mountain Province Increases Placement 

Mountain Province Diamonds Inc. increased its previously announced non-brokered private placement of common shares, due to strong support from existing shareholders, to $28 million from $24 million. Additional proceeds under the private placement will be used to support capital expenditures at the Gahcho Kué project, the 2014 Tuzo deep drill program and for general corporate purposes. The private placement is expected to close on or before November 22 and is subject to regulatory approval.

Peregrine Identifies More Kimberlites

Peregrine Diamonds Ltd. completed processing a sample from the CH-6 kimberlite on its Chidliak property and diamond recovery is underway at the Saskatchewan Research Council facility in Saskatoon. Diamond grade results are expected by mid-December and an independent valuation of the diamond parcel will be completed in early 2014. In addition, Peregrine Diamonds discovered three new kimberlite bodies during its Chidliak summer exploration program, bringing the projects total number to 67.

ECONWATCH 	  

Diamond Industry Stock Report 

Tough week on stocks as retail investors worry about weak Christmas sales from mid- and lower-income brackets with Birks (-11%) and Zale (-7%) leading declines; European shares flat, India shares mostly lower with Classic (-11%), but Winsome (+27%) surged. Mining firms mainly flat except for Stornoway (-13%) and Peregrine (+22%). View the extended stock report.

Nov. 21 Nov. 14 Chng.
$1 = Euro 0.740 0.740 0.000
$1 = Rupee 62.94 63.05 -0.1
$1 = Israel Shekel 3.56 3.52 0.04
$1 = Rand 10.13 10.19 -0.06
$1 = Canadian Dollar 1.05 1.05 0.00

Precious Metals
Gold $1,242.30 $1,287.60 -$45.30
Platinum $1,386.00 $1,444.00 -$58.00

Stock Indexes Chng.
BSE 20,229.05 20,399.42 -170.37 -0.8%
Dow Jones 16,009.99 15,876.22 133.77 0.8%
FTSE 6,681.33 6,666.13 15.20 0.2%
Hang Seng 23,580.29 22,649.15 931.14 4.1%
S&P 500 1,795.85 1,790.62 5.23 0.3%
Yahoo! Jewelry 961.19 971.87 -10.68 -1.1%