A French Company Acquires Another Prestigious Italian Jewelry Brand

Tilda Swinton, a spokesperson for Pomellato.

Less than two years after French conglomerate LVMH acquired luxury Italian jewelry brand Bulgari; its French competitor, holding company Kering, finalized its acquisition of Italian jewelry brand Pomellato.

The agreement for Kering to purchase a majority stake in Pomellato was announced in April. On Thursday, Kering, formerly known as PPR, announced in a brief statement that the agreement received clearance from the antitrust authorities and has been finalized.

Pomellato was one of the few truly prestigious independent Italian jewelry brands left to acquire. The brand was founded by Pino Rabolini in Milan in 1967, pioneering the concept of ready-to-wear jewelry. The idea was that jewelry is not just a status symbol but an accessory to be worn and replaced at any time of the day. The current CEO, Andrea Morante, will remain in this position with the company.

Pomellato ranks among the top five European jewelers by sales, with 2012 revenues of €146 million ($190 million). It has a distinct style, an international following and an aura of exclusivity. The brand is known for its colorful rounded cabochon gems and its tactile forms. For example, pavé patterns are created with gemstones of various sizes and irregular forms. In recent years, the company was also known for its advertising partnership with actress Tilda Swinton, who appeared in company photographs and videos.

In 1995, Pomellato launched a second brand, Dodo, an accessible line of 18k gold charms in the shapes of animals. The name, after an extinct bird, was chosen as a way to exemplify the need to protect nature. The brand supports the Italian World Wildlife Fund, working to prevent the extinction of other animal species.

Pomellato’s distribution network includes 86 mono-brand stores (45 Pomellato, 41 Dodo) as well as approximately 600 independent points of sale around the world. More importantly for Pomellato and Kering is that there is plenty of room for growth. Pomellato has expressed an interest to extend its international distribution. Kering, with its immense size as an international player in the apparel and accessories markets, can fuel that growth.

Kering is present in more than 120 countries and generated revenues of €9.7 billion ($12.4 billion) in 2012. With the acquisition Pomellato finalized, the company now has a majority stake in 19 brands that include international luxury fashion brands Gucci, Bottega Veneta and Saint Laurent; French luxury jewelry brand, Boucheron; Chinese luxury jewelry brand, Qeelin; luxury Swiss watch brands, Girard-Perregaux and Jewn-Richard; and sports brand, Puma.

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

Read More

The Dramatic Fall of India’s Largest Jewelry Company

Mehul Choksi, managing director of Gitanjali Group, is under investigation for stock market manipulations.

One of the world’s largest diamond and jewelry companies has quickly fallen on hard times. The Gitanjali Group, which bills itself as the “world’s largest integrated conglomerate of diamonds, jewelry and lifestyle brands,” has seen its share price fall 79 percent in a month, largely due to the Reserve Bank of India's recent restrictions on gold imports that has damaged much of the jewelry trade in the country. However, the latest setback on Thursday appears to have been self afflicted.

Gitanjali’s managing director, Mehul Choksi, has been suspended of trading activities by the Securities and Exchange Board of India (SEBI), as part of a probe into suspected market manipulations, according to reports by the Economic Times of India and other publications in the country.

Choksi is one of 26 individuals and firms that were suspended Thursday, according to reports. They are all suspected of being linked with a securities and stock brokerage services company called Prime Broking Company (India) Ltd., which also operates under the name Prime Securities. The company is described by The Economic Times as a “significant shareholder” of Gitanjali. Choksi is the leading shareholder of Gitanjali with a 51 percent stake. They are being investigated for allegedly making trades while concealing their identities, according to the report. 

According to a second story in The Economic Times, Gitanjali shares appear to be in the center of this investigation. Several investors reportedly purchased Gitanjali shares through Prime Broking, “which allegedly pledged these without their consent to take exposure on the derivatives segment of NSE.” Two of the suspended parties have filed police reports against Prime Broking.

The company that began in 1966 as a cutting and polishing diamond operation for the jewelry trade has undergone dramatic and expansive growth. Gitanjali now operates on five continents and in just about every sector of the jewelry industry. It is one of India’s largest diamond manufacturers, jewelry manufacturers and retailers. It manufactures rough diamonds, designs and builds jewelry, creates jewelry brands and distributes diamonds and jewelry for wholesale and retail—including its own stores in India, the US and other parts of the world. It claims to be:

* The world’s largest number of established jewelry brands under one roof;

* A distributor and retailer with 4,000 points of sales throughout the world; and

* The largest precious jewelry manufacturer in the world, with the ability to produce 235,000 jewelry pieces per month across nine manufacturing facilities.

In India—in addition to its vast manufacturing, design, distribution and retail operations—it owns approximately 20 jewelry brands, each one fronted by a Bollywood star.

Among its holdings in the US is Samuels Jewelers, the country’s fifth largest retail jewelry chain with 111 stores. In Italy, it owns five jewelry brands under the name “Leading Italian Jewelers,” with the most prominent being luxury jewelry brand Stefan Hafner. It also has large operations in Belgium, UK, Japan, China, Southeast Asia and the Middle East.

If that’s not enough, the company owns 17 watch brands (including Italian brands Morellato and Pirelli) and several brands that deal in household products, particularly tableware and silverware, that include the Italian companies Greggio Argento and Donatella.

Gitanjali’s influence on the worldwide jewelry trade cannot be underestimated. Its suffering may have a domino effect—particularly in India..

The company trades on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). Since June 24, the company went from a high of 550 rupees ($9.21) to a low of 115 ($1.93) on the BSE. It last traded at 115.60 rupees.

The impact of this setback will soon be known as markets will open in a few hours.

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

Read More

Blue Nile Chairman to Step Down As Company Posts 5th Consecutive Quarter of Double-Digit Growth

Blue Nile Starlight Diamond Eternity Ring in platinum

Blue Nile, Inc. said Thursday that year-over-year net sales increased 18.7 percent to $108 million for the second quarter ended June 30. Operating income for the quarter totaled $3.4 million, representing an operating margin of 3.2 percent of net sales. Net income totaled $2.2 million, or $0.17 per diluted share. It’s the fifth consecutive quarter of double-digit growth, the company said.

In addition, the Seattle-based online retailer that specializes in diamonds and diamond jewelry announced that its founder, Mark Vadon, will step down from his role as chairman and director of the board effective December 31. Blue Nile President and CEO Harvey Kanter will assume the role of chairman.

"Founding and being a part of Blue Nile for the past 14 years has been a great honor, and I am tremendously proud of the entire team for fostering our culture of innovation and obsession over each and every customer," Vadon said. "After working with Harvey and his leadership team over the last year and seeing the impressive growth trajectory of the business, the entire board and I feel confident passing the chairmanship to Harvey to continue to build a global consumer brand."

"Mark revolutionized the diamond industry and founded Blue Nile on the principle that there is a better way to buy diamonds and fine jewelry by offering unique online tools, high quality diamonds, and incredible values," Kanter added. "That is and will always be his legacy, and the company will continue to execute his vision."

Non-GAAP adjusted EBITDA for the quarter totaled $5.5 million. For the trailing 12-month period ended June 30, net cash provided by operating activities totaled $26.1 million compared to $18.7 million for the prior 12-month period. For the same period ended June 30, non-GAAP free cash flow totaled $22.9 million, as compared to $15.6 million for the prior.

Other second quarter highlights include:

* U.S. engagement net sales increased 22 percent to $63.9 million.

* U.S. non-engagement net sales increased 11.3 percent to $27 million.

* International net sales increased 19.1 percent to $17.1 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 20.6 percent.

*Gross profit totaled $20.1 million. As a percent of net sales, gross profit was 18.6 percent compared to 18.9 percent for the second quarter of 2012.

* Selling, general and administrative expenses were $16.7 million, compared to $14.9 million in the second quarter of 2012. This figure includes stock-based compensation expense of $1.3 million for the second quarter in 2013 and 2012.

* Earnings per diluted share included stock based compensation expense of $0.07 compared to $0.06 for the second quarter of 2012.

* At the end of the quarter, cash and cash equivalents totaled $47.3 million.

In its financial guidance, Blue Nile said it expects third quarter net sales are expected to be between $96 million and $100 million; and earnings per diluted share to run from $0.13 to $0.17.

For the 2013 fiscal year, net sales are projected to be between $440 million and $470 million; and earnings per diluted share are projected at $0.75 to $0.85.

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

Read More