LVMH Jewelry Sales Hard Hit in H1
LVMH Moët Hennessy Louis Vuitton recorded revenue of €7.8 billion in the first half of 2009, a slight increase over 2008 despite the crisis. Watches and jewelry sales fell however 17 percent to €346 million. Jewelry sales by LVMH bounced back in the second quarter. In the first quarter, the Watches & Jewelry business unit had revenues of €154 million, a 27 percent year-over-year decline. However, in the second quarter a revival in sales was noted. Sales totaled €192 million, a much smaller 6.8 percent decline. LVMH blamed retailer destocking for the decline in sales in the business unit, with half year profit from recurring operations at just €20 million. According to the company, the watches and jewelry brands have focused on “strengthening their iconic lines” and maintaining cost management. The De Beers jewelry joint venture, as well as a number of other jewelry operations, “concentrated on improving the productivity of their networks and their boutiques,” LVMH noted. The Fashion & Leather Goods division is the only one that posted a rise in revenue - an 8 percent increase to €2.99 billion. For the entire group, revenues reached €7.8 billion and profit from recurring operations totaled €1.36 billion. Group share of net profit is €687 million, a 23 percent year-over-year decline. In its outlook, the company said LVMH will continue to gain market share in the second half of the year with a number of planned product launches. (source:Edahn Golan idexonline)
Luxury Jewelry Sales Don’t Necessarily Mean Big Profits
Harry Winston: Uber-Luxury Jewelry Sales Don’t Necessarily Mean Big Profits Harry Winston Diamond Corporation’s 2008 annual report to shareholders highlights one of its key strategies: “The company focuses on the two most profitable segments of the diamond industry, mining and retail, in which its expertise creates shareholder value.” While we agree with this statement conceptually, there is a problem: the retail segment of the company’s business – world premier retail jeweler Harry Winston – doesn’t seem to be contributing to that strategy. In the year just ended (January 2008), Harry Winston’s retail stores posted an operating loss for the full year – $3.1 million on sales of $265.5 million, or a net operating loss on sales of 1.1 percent. Further, for the all-important fourth quarter, the retail division, generated an operating loss of $1.5 million on sales of $85.0 million. For the prior year (12 months ended January 2007), Harry Winston’s retail stores generated a disappointing operating profit of just $2.2 million, or 1.0 percent of sales of $226.2 million. By contrast, Tiffany & Co. generated an operating margin of 18.0 percent for its fiscal year ended January 2008, up from 16.8 percent in the prior year. A typical specialty jeweler should generate an operating profit of 10 percent or so of sales. Go for more to: IDEX online (May 22, ''08, 11:00 Ken Gassman)
Gold in history part three
The middle ages (400 – 1400 AD) Compared to earlier and later periods, the middle ages was relatively dry in terms of gold’s history, but certainly not without incident. The Dome of the Rock - The Mosque of Omar on the Temple Mount in Jerusalem is the oldest existing Islamic monument. It was built in 685-691 on the site where Mohammed is said to have ascended to Heaven. The Temple Mount itself is sacred as is an Islamic shrine and a major landmark located on the Temple Mount in Jerusalem. The dome was refurbished in1998 using 80 kilograms of gold. The Roman Empire fell in 476 AD, when Emperor Romulas Augustus was deposed by the Goths. In the 6th century, the Byzantine Empire resumed gold mining in central Europe and France, for the first time since the fall of the Roman Empire. In 788, Charlemagne, King of the Franks, overran the Avars and plundered their vast quantities of gold, making it possible for him to take control over much of Western Europe. With the Norman conquest in 1066, a metallic currency standard was finally re-established in Great Britain, with the introduction of a system of pounds, shillings, and pence. The pound was literally a pound of sterling silver. In the second half of the 13th century, Marco Polo wrote of his travels to the Far East, where the “gold wealth was almost unlimited.” In 1284, Venice introduced the gold Ducat, which soon became the most popular coin in the world, and remained so for over five hundred years. In the same year, Great Britain issued its first major gold coin – the Florin. But it wasn’t until 1377 that Great Britain shifted to a monetary system based on gold and silver. source: www.goldipedia.com
Gold in History part two
Rome The next great civilization to prize and value gold were the Romans. They, or at least their slaves and prisoners of war, mined gold extensively throughout the empire, developing the technology of mining to new levels of sophistication. For example, they would divert streams of water in order to mine hydraulically, and even pioneered ''roasting'', the technique of separating gold from rock. In 202 BC, during the second Punic War with Carthage, the Romans won access to the gold mining region of Spain, allowing them to recover gold through stream gravels and hard-rock mining. But it wasn’t until 50 BC that the widely used Aureus gold coin was issued – eight years after Julius Caesar brought back enough gold from a victory in Gaul to give 200 coins
Gold in history
The ancient world (pre 400 AD) In the quest for gold by various ancient civilizations, prisoners of war were sent to work the mines, as were slaves and criminals, all during a time when gold had no value as ''money,'' but was just considered a desirable commodity in itself. Egypt As anyone who has seen or heard about the incredible treasures of Tutankhamen probably knows, Ancient Egypt left a rich legacy of gold. Hieroglyphs stretching back to 2600 BC describe gold, which was considered by the ancient Egyptians to be a divine and indestructible metal, and was associated with the brilliance of the sun. Ancient Egyptians even believed the skin of their gods was golden. By 1500 BC, the immense gold-bearing regions of Nubia had made Egypt a wealthy nation, and gold became the recognised standard medium of exchange for international trade. The oldest known treasure map (which today sits in the Turin Museum) also dates back to the gold of Ancient Egypt – around 1320 BC. However, it wasn’t until 1200 BC that the Egyptians mastered the art of beating gold into leaf to extend its use, as well as joining it with other metals to create alloys, which allowed for improved hardness and colour variations. It was also around this time that Egyptians started to cast gold using the lost-wax technique, which is still at the heart of jewellery making today. Greece Gold was just as central to ancient Greece as ancient Egypt, but in a way that seems more familiar to us today – as a primarily financial commodity. By 550 BC, the Greeks had started mining for gold throughout the Mediterranean and Middle East regions, and for a long time thought it was made from a particularly dense combination of water and sunlight. In 344 BC, Alexander the Great crossed the Hellespont with 40,000 men, beginning one of the most extraordinary campaigns in military history. Included in the spoils of war were vast quantities of gold from the Persian Empire. It wouldn’t be the last time that gold would be at the centre of bloody international conflicts. According to Greek mythology, Agamemnon was king of Mycenae and the leader of the Greek expedition to Troy. He is believed to have lived around 1550 BC. This gold funerary mask, excavated at Mycenae by the German archaeologist Heinrich Schliemann in 1876, is reputed to be his. By 325 BC, the Greeks had mined in areas from Gibraltar to Asia Minor and Egypt, and would soon begin to practice alchemy – the quest to turn base metals into gold. Considering that gold is an element, the alchemists were of course never successful, but their efforts are clear evidence of gold’s ongoing mystique and desirability. source: World Gold Council
Holiday Season the “Best Ever” for Amazon, Silver Jewelry Most Popular
Holiday Season the “Best Ever” for Amazon, Silver Jewelry Most Popular The holiday was hot for online retail giant Amazon.com. The company reported that the 2007 holiday selling season was its best ever, with the busiest day being December 10. On that day, shoppers ordered more than 5.4 million items. Amazon.com’s jewelry top sellers were all low-cost fashion items. They included sterling silver open double flower pendants that retail for less then $30, sterling silver filigree circle pendants that sell for $49 or less and 14 karat yellow gold four-prong oval peridot stud earrings, which are offered for $29.99. Top selling watches were the Timex heart rate monitor watch, the Lego Kids’ Star Wars Darth Vader watch and Skagen women’s Silver Dial mesh bracelet watch. The company did not release sales figures. source: idex online
Swatch & Tiffany
The Swatch Group and Tiffany & Co. announced Sunday a strategic alliance to develop, produce and distribute worldwide Tiffany & Co. brand watches. The agreement was reached after a year of discussions. The term of the agreement is 20 years and may be extended for an additional ten years if certain conditions are met. As part of the agreement, Swatch will incorporate a new watch-making company in Switzerland, authorized to use Tiffany’s trademarks and operate under the Tiffany name. Tiffany will earn from the company’s pre-tax profits. In addition, Tiffany will have one out of five seats on the board of directors, and seats on both the product design and marketing committees. The Watch company will be wholly-owned by Swatch Group. The Tiffany & Co watches will be distributed through the Swatch distribution network - including affiliates, Swatch retail facilities and third party distributors, and through Tiffany stores. In addition, Swatch affiliates will have the right to establish and operate Tiffany & Co. watch stores in certain markets outside the U.S. The watch stores may also offer a targeted selection of Tiffany & Co. jewelry. The watch company will support distribution with a significant marketing campaign. According to Tiffany''s chairman and CEO Michael J. Kowalski, “Our advertising and that of the new watch company will be fully integrated.” Calling it a “historic agreement,” Kowalski said Swatch is the best conceivable strategic partner for Tiffany’s long-planned re-entry into watch distribution. Nicolas G. Hayek, chairman and co-founder of The Swatch Group, said the agreement is a path breaking strategic move, adding, “It allows without any financial capital transaction the maximum utilization of manufacturing and distribution resources of both partners.” No further financial details were disclosed, however the two companies will host a press conference in Tiffany’s flagship New York store on Wednesday to provide additional details about the arrangement. source: idexonline source:idexonline
gold gets more expensive
Amanda Gizi, spokesperson of Jewelery Information Center answered some questions for bloggingstocks.com about the gold market: How will the increase in gold prices impact jewelers this Christmas season? 'Most of the stock for the upcoming season has already been purchased, and while the price of gold might fluctuate, jewelers are not prone to adjust prices with every blip of the market.' How does this market differ from 1980, when jewelry sales suffered greatly under $900 gold? 'Given inflation, the current $700+ gold is not nearly as expensive as $900 gold was in 1980 dollars. Using the Bureau of Labor Statistic's inflation calculator, I found that gold would have to reach $2,270.94 in today's market to equal the value at its 1980 peak.' How would you assess the conjecture of CLSA Chief Strategist Christopher Wood, as reported by BloggingStock's Weld Royal, that gold could reach $3,400 in the next three years? 'Unrealistic, given the market's history.' Gizi went on to say that despite its sharp price increase, platinum continues to be a popular jewelry choice, especially in bridal selections, and other metals such as palladium and tungsten carbide are increasingly found in men's jewelry. In gemstones, Gizi fancies (gems in colors other than their common form, such as pink sapphires, blue diamonds, etc.) are very hot on the market now. Her take on the industry? $700 gold isn't going to scare the merchants, and they don't expect it to scare away the customers, either. My take? The cost of the gold in a piece of fine jewelry, at best, represents no more than 5-10% of the sale price, so the price of gold will have to increase a great deal before it severely impacts the jewelry trade. Don't sell your Tiffany and Co. out of gold fear.