Jessica Simpson, Zale to Launch Jewelry Collection

Jessica Simpson will launch a diamond fashion jewelry collection available at Zale Corp. branded stores beginning in October.

The Dallas-based jewelry retailer made the announcement Tuesday. The Jessica Simpson collection will feature rings, earrings, pendants and bracelets, available in a range of affordable price points, the company said. Simpson’s collection will be offered exclusively at Zales Jewelers, Zales Outlet and Peoples Jewellers stores in the U.S., Canada and Puerto Rico.

In addition to being an internationally known recording artist, actress and television personality, Jessica Simpson has established herself as a fashion designer. The Jessica Simpson Collection extends into 22 product categories including shoes, apparel, accessories and fragrances.

“I have always wanted to design fine jewelry and am very excited to launch a new collection exclusively at Zale,” Simpson said in a statement. “Jewelry is a very personal expression that celebrates who you are and this collection is very much a reflection of who I am.”

Zale Corp. is a leading specialty jewelry retailer in North America. Its brands include Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers and Mappins Jewellers and Piercing Pagoda.

Zale Corp Q4 Sales Up 9.4%, Comp Sales Up Nearly 10%; Losses Also Rise

A Zales jewelry store worker in San Bruno, Calif. examines watch inventory.  Photo credit: Paul Sakuma / AP

Jewelry retailer Zale Corp. said Wednesday that fourth quarter sales rose 9.4 percent year-over-year to $377 million. Same store sales for the period, ended July 31, increased 9.8 percent, compared to a decrease of 2.1 percent during the same period last year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, same store sales increased 8.4 percent for the quarter.

However, the Dallas-based company—whose brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda—reported a loss of $32.6 million, or $1.02 a share, compared with $28.5 million, or 89 cents a share, a year earlier. The company said the main culprit was higher prices for gold, silver and diamonds.

“This quarter represents the third consecutive quarter of positive same store sales,” said Matt Appel, Zale Corp. chief administrative officer and chief financial officer. “Despite the headwinds imposed by volatility in commodity markets and the overall economy, our gross margin performance in the quarter and full year reflects the traction we are gaining in the marketplace.”

The company, which has 1,830 retail locations in the U.S., Canada and Puerto Rico, said gross margin on sales increased 6.4 percent to $193 million for the fourth quarter. The company achieved gross margin on sales of 51.3 percent, compared to 52.7 percent in the comparable quarter last year. Excluding last-in, first-out inventory charges of $7.9 million and $2.9 million for the fourth quarter of 2011 and fourth quarter of 2010, respectively, gross margin would have been 53.4 percent and 53.5 percent for the 2011 and 2010 quarters, respectively. The $5 million increase in LIFO charges for the fourth quarter of 2011 was due to rising diamond, gold and silver commodity costs.

Selling, general and administrative expenses for the fourth quarter were $204 million, or 54.1 percent of revenues, compared to $197 million, or 57 percent of revenues, in the same period last year. The company's operating loss for the quarter was $24 million compared to an operating loss of $31 million in the prior year quarter. Operating margin improved 270 basis points, to negative 6.4 percent, for the fourth quarter, compared to negative 9.1 percent in the same period last year.

The company recorded an income tax benefit of $1 million, compared to a benefit of $6 million in the comparable quarter last year. The 2010 quarter included a $4 million tax benefit related to net operating loss carrybacks pursuant to the Business Assistance Act of 2009. The company said it does not foresee any further benefits from this Act.

Inventory at July 31, stood at $721 million, compared to $703 million in the same period last year. The company had outstanding debt for the period was $395 million, compared to $296 million in the fourth quarter of the prior year.

2011 Fiscal Year Report After Jump

Revenues for Zale Corp.’s 2011 fiscal year, ended July 31, increased 7.8 percent to $1.74 billion. Same store sales for the year increased 8.1 percent, compared to a decrease of 6.6 percent for fiscal year 2010. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, comparable store sales increased 7.1 percent for 2011.

However, for the fiscal year, the company incurred a net loss from continuing operations of $112 million, or $3.49 per share, compared to a net loss from continuing operations of $96 million, or $2.99 per share, in fiscal year 2010, primarily due to a charge of $46 million to interest expense, partially offset by a $26 million net decrease in store impairment and closure charges.

The company said margin on sales was $880 million, an increase of 8.1 percent compared to $814 million in the same period last year. The Company achieved gross margin on sales of 50.5 percent, compared to 50.4 percent in the prior fiscal year.

Selling, general and administrative expenses were $860 million, or 49.3 percent of revenues, in the 2011 fiscal year, compared to $846 million, or 52.4 percent of revenues, in fiscal year 2010. The company's operating loss for fiscal year 2011 improved by $87 million to $28 million, compared to an operating loss of $115 million in the prior fiscal year. Operating margin improved 550 basis points, to negative 1.6 percent for the fiscal year, compared to negative 7.1 percent for fiscal year 2010.

For the year, the company recorded income tax expense of $2 million, compared to a benefit of $29 million in fiscal year 2010. The fiscal year 2010 benefit is primarily a result of tax benefits related to net operating loss carrybacks pursuant to the Business Assistance Act of 2009.

“In fiscal 2011, we made substantial progress in the multi-year initiative to return to profitability,” commented Theo Killion, Zale Corp. CEO. “The strength of our assortment, marketing and field organization position us well to navigate through the current economic environment.”

Consumer Confidence ‘Deteriorates’ in August

De Beers Beverly Hills store. Photo credit: Anthony DeMarco

The Conference Board Consumer Confidence Index, which improved slightly in July, plummeted in August. The Index now stands at 44.5 (1985=100), down from 59.2 in July. It is the lowest reading since April 2009. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 last month.

“Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, The Conference Board Consumer Research Center director. “A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence.”

Consumers’ appraisal of present-day conditions weakened further in August. Consumers claiming business conditions are “bad” increased to 40.6 percent from 38.7 percent, while those claiming business conditions are “good” inched up to 13.7 percent from 13.5 percent. Consumers' assessment of employment conditions was more pessimistic than last month. Those claiming jobs are "hard to get" increased to 49.1 percent from 44.8 percent, while those stating jobs are “plentiful” declined to 4.7 percent from 5.1 percent.

Consumers' short-term outlook deteriorated sharply in August. Those expecting business conditions to improve over the next six months decreased to 11.8 percent from 17.9 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent. Consumers were also more pessimistic about the outlook for the job market. Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

Kim Kardashian’s Wedding Band and Wedding Day Jewelry

The wedding band is shown with Kardashian’s 20.5-carat engagement ring. Photo source: entertainmentwise website

Jewelry designer Lorraine Schwartz played what appears to be an exclusive role in Kim Kardashian’s jewelry for her August 20 wedding to Kris Humphries.

“Kim chose a diamond eternity band set in platinum by Lorraine Schwartz, approximately 12 carats, with an estimated price tag of $60,000,” said Jewelry expert Michael O'Connor. “Kim clearly wanted the best quality wedding ring, and since the diamonds are set in platinum the setting won't fade or tarnish - making it the perfect symbol of enduring love.”

Kardashian's diamond headpiece and diamond drop earrings designed by Lorraine Schwartz. Photo credit: E News

All totaled, Kardashian wore approximately $10 million worth of jewels on her wedding day, which included a diamond headpiece and diamond drop earrings, also designed by Lorraine Schwartz, E News reports. The entertainment news media company will air the wedding as a two-part special October 8 and 9.

LJ International Revenue Up 26%, Profit Up 59%, Led by China Retail Business

The Enzo retail chain in China is a stellar performer for  LJ International.

Hong Kong-based jewelry manufacturer and retailer, LJ International Inc., reported Thursday that operating revenue in the second quarter increased 26 percent to $41.5 million. Gross profit increased 59 percent to $20.6 million. Operating income increased 13 percent to $3.3 million. Net income for the period ended June 30 rose 67 percent to $3.85 million.

It was the company’s retail division in China led the way showing exceptionally strong sales and offsetting a decline in its international wholesale business due the sluggish economy in the U.S. and Europe.

The company, which owns the Enzo store chain in China, reported that second quarter retail sales increased 70 percent year-over-year to $28.4 million. Same store sales for the period increased 61 percent for the period, ended June 30. Enzo added 16 new stores in the second and since then added another 12 stores to boost its branded retail chain to 166 stores. LJ International said it will continue to aggressively expand its retail network in China.

LJ International’s wholesale revenue fell 19 percent to $13.16 million year-over-year. Sales from the U.S. and Europe decreased 26 percent and 6 percent year-over-year, respectively, representing 71 percent and 20 percent of wholesale revenue. Meanwhile, sales from Asia and other markets grew 49 percent and represented 9 percent of wholesale revenue for the period. The company distributes a full complement of jewelry lines under the Lorenzo brand name to fine jewelers, department stores, national jewelry chains and electronic and specialty retailers in North America and Western Europe.

“Our solid financial performance came in ahead of our expectation, mainly driven by the stronger than expected performance of Enzo, the retail business arm targeting affordable luxury segment,” said Yu-Chuan Yih, LJ International chairman and CEO. “Consumer and luxury product markets are widely perceived to be two of the fastest growing sectors in the expanding Chinese economy. Enzo, with solid financial strengths, will continue to expand its retail network, deepening penetration in its affluent first and second tier city network while strengthening its presence in the third tier cities. We are well on track to operate a network of about 200 stores at the end of the year and have scheduled to add approximately 26 stores by the end of the third quarter, bringing the number to about 180 stores.”

Yu-Chuan Yih added, “Amid an intricate macro environment which impacts the wholesale markets, we remain a key partner of our long-standing wholesale customers, which has warranted stable sales throughout the economic cycle. We will focus on strengthening collaboration with core customers to better align product strategy and design with the changing preferences of the end consumers, to add value to our strong relationship with leading wholesale customers; and our high quality of products and services would continue to help us maintain a steady growth in the wholesale business amidst unfavorable market conditions.”

In its outlook the company said it expects a 19 percent to 25 percent increase in gross revenue, year-over-year, to $42.5 million and $44.5 million. This outlook is fueled by an expected 33 to 38 percent increase in retail sales in the range of $28 to $29 million for the period. Wholesale revenue is expected to be $14.5 million to $15.5 million, representing a flat growth rate to an increase of 6 percent for the period.

More financial highlights for the second quarter after the jump:

Gross profit margin in the second quarter 2011 was 50 percent, an expansion of 11 percentage points primarily due to the margin expansion of retail business.

Retail gross profit in the second quarter was up 97 percent year-over-year to $18.8 million. Retail gross profit margin in the second quarter was 66 percent, a year-over-year expansion of 9 percentage points. The increase in retail gross profit margin was primarily due to a more favorable sales mix, with more sales of colored gemstone items, the company said.

Wholesale gross profit in the second quarter fell 47 percent to $1. 7million. Wholesale gross profit margin in the second quarter fell 14 percent, down from 21 percent in the second quarter 2010. The decline in wholesale gross profit and gross profit margin was primarily due to a change of costing methodology.

Sales, general and administrative expenses in the second quarter 2011 increased 66 percent year-over-year to $10.2 million. As a percentage of operating revenue, SG&A expenses were 25 percent, compared to 19 percent in the second quarter 2010. The increase was primarily due to an increase in investment in marketing campaign and marketing team to support the continued strengthening of brand building.

Rental expenses in the second quarter 2011 increased 98 percent year-over-year to $6.1 million. As a percentage of operating revenue, rental expenses were 15 percent, compared to 9 percent in the second quarter 2010. The increase was primarily due to rental costs are mostly sales-linked and trended up as retail revenue saw a significant increase during the quarter. The increase was partly due to the increase in rental space as a result of expansion of retail network.

Depreciation in the second quarter 2011 was $960,000, up 101 percent year-over-year.

Operating expenses, including SG&A expenses, rental, net gain (loss) on derivatives and depreciation, increased 73 percent year-over-year to $17.2 million in the second quarter. As a percentage of operating revenue, operating expenses were 42 percent, compared with 30 percent in the second quarter 2010.

Operating income in the second quarter 2011 increased 13 percent year-over-year to $3.3 million.

Operating margin in the second quarter 2011 was 8 percent, compared to 9 percent in the same period 2010.

Operating income from retail business in the second quarter 2011 was US$4.4 million, up 106 percent year-over-year. Retail operating margin was 16 percent, compared to 13 percent in the second quarter 2010.

Operating loss from wholesale business in the second quarter 2011 was $660,000 compared to an operating income of $1.15 million in the second quarter 2010. The operating loss from wholesale business in the second quarter was impacted by the reduced revenue caused by change in sales return provision and a reduced gross profit caused by revised inventory valuation.

Net other revenue in the second quarter 2011 amounted to $1.24 million, compared to an expense of US$0.20 million in the second quarter 2010.

Income tax expenses in the second quarter 2011 were $740,000, compared to $450,000 in the second quarter 2010, mainly due to a smaller amount of tax benefits for retail business during the period.

Net income from operating businesses and excluding non-recurring items and derivative gain from warrants is forecast to be in the range of $3.5 million to $4 million, a 9 percent to 25 percent year-over-year increase.

Tiffany Still Riding High, Reports Strong Growth in all Regions, Raises Earnings Forecast

Tiffany & Co. said Friday that worldwide net sales in the second quarter increased 30 percent year-over-year to $872.7 million due to strong growth in all geographic regions. Excluding the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales increased 24 percent and comparable store sales rose 22 percent.

The luxury retail jeweler said net earnings increased 33 percent for the period ended July 31 to $90 million and, excluding nonrecurring charges, rose 58 percent in the quarter. Management increased its earnings forecast for fiscal 2011 to reflect the better-than-expected second quarter results.

“We are extremely pleased by these results which confirm the growing global appeal of Tiffany's product offerings,” said Michael J. Kowalski, Tiffany chairman and CEO. “In addition, we have been able to absorb precious metal and gemstone cost increases while improving our gross and operating margins.”

Net sales by region:

* In the Americas, second quarter sales rose 25 percent to $438.2 million, Tiffany said. On a constant-exchange-rate basis, total sales rose 24 percent and same store sales increased 23 percent. Sales in the New York flagship store increased 41 percent in the second quarter due to strong foreign tourist demand. Same store sales in the Americas increased 19 percent and Internet and catalog sales in the Americas increased 16 percent.

* In Asia-Pacific, second quarter sales increased 55 percent to $173.2 million in the second quarter. On a constant-exchange-rate basis, sales increased 45 percent same store sales increased 41 percent, due to growth in most countries with the largest increase in the greater China region.

* In Japan, second quarter sales rose 21 percent to $142.5 million. On a constant-exchange-rate basis, total sales increased 8 percent due to same store sales growth of 8 percent.

* In Europe, sales increased 32 percent to $101.3 million in the second quarter. On a constant-exchange-rate basis, sales increased 17 percent and same store sales rose 11 percent, reflecting growth in most countries.

* Other sales rose 46 percent to $17.4 million in the second quarter, due to increased wholesale sales of finished products to independent distributors within emerging markets, partly offset in the first half by a decline in wholesale sales of rough diamonds.

Other financial highlights in the second quarter:

* Gross margin (gross profit as a percentage of net sales) was 59 percent, compared with 57.8 percent for the same period of the prior year. The increases were due to sales leverage on fixed costs.

* SG&A (selling, general and administrative) expenses rose 37 percent in the second quarter, which included nonrecurring costs of $34 million in the second quarter, versus $4 million in both of the prior-year periods, related to the relocation of Tiffany's New York headquarters staff to 200 Fifth Avenue. Excluding the nonrecurring costs, SG&A expenses rose 26 percent for the period, reflecting higher store occupancy, staffing, marketing and sales-related variable costs.

* The effective income tax rate was 31.2 percent in the quarter versus 34 percent for the same period last year, with the decline primarily due to a reversal of a valuation allowance against certain deferred tax assets.

* At July 31, 2011, cash and cash equivalents and short-term investments totaled $565.2 million versus $614.7 million last year. Total short-term and long-term debt represented 29% of stockholders' equity compared with 40% a year ago.

* Net inventories at July 31 were 18 percent above the prior year. The increase was planned to support sales growth, store openings, product introductions and expanded assortments, and higher product and raw material acquisition costs. Almost one-fourth of the increase resulted from the effect of translating stronger foreign currencies into U.S. dollars.

* Tiffany said it repurchased approximately 330,000 shares of its common stock in the second quarter at a total cost of $24.5 million, or an average cost of $74.29 per share. In the first half, it spent $52.5 million to repurchase approximately 783,000 shares at an average cost of $67.00 per share. At July 31, approximately $340 million remained available for future repurchases under the currently authorized plan, which expires January 2013.

In its outlook, Tiffany said it is increasing its full year earnings forecast to $3.65 - $3.75 per diluted share (not including nonrecurring expenses) from the previous forecast of $3.45 - $3.55 per diluted share due to the better-than-expected second quarter results.

“Despite continuing economic uncertainty, our strong first half performance gives us ample reason to remain confident about our prospects for the balance of the year,” Kowalski said. “We are encouraged that total worldwide sales growth in the third quarter-to-date is continuing to exceed our expectations due to noteworthy strength in the Americas, Asia-Pacific and Japan, demonstrating, once again, the attraction of the Tiffany & Co. brand.”

Tiffany operates 236 stores (98 in the Americas, 55 in Japan, 52 in Asia-Pacific and 31 in Europe), versus 223 a year ago (91 in the Americas, 57 in Japan, 48 in Asia-Pacific and 27 in Europe).

Jewelry and Watch Brands Score Low on their Digital IQ

E-tailers and department stores lead the rankings and Jewelry & Watches and Accessory brands lag behind in their digital IQ.  Image source: Digital IQ Index: Specialty Retail, L2

E-tailers have the highest digital IQ, department stores saw the largest gain in their digital IQ during the past year and the digital IQ of home furnishings brands fell from the prior year. However, it is jewelry and watch brands who rate below every category with the exception of accessories.

The good news is that with a score of 68 the jewelry and watch category “vastly improved (over 2010 results) as brands began making investments in social media,” according to L2, a digital think tank, which published the ranking of 64 companies in eight specialty categories.

For its second annual survey titled, Digital IQ Index: Specialty Retail, L2 based its ranking on the following criteria:

* Website functionality, content and brand translation, 30 percent;

* Digital marketing, 30 percent;

* Social media 20 percent; and

* Mobile, 20 percent

This year’s rankings placed a stronger emphasis on the explosion of mobile purchasing (m-commerce) and the exceptional growth of facebook as both a social media marketing tool and as a newly minted e-commerce platform, known as f-commerce.

Based on the criteria, a scoring methodology was created and rankings for the brands were based on the following categories.

Genius, 140 and above;

* Gifted, 110 - 139;

* Average, 90 - 109;

* Challenged, 70 -89;

* Feeble, 70 and below

The only jewelry and watch brand that made the Gifted” category was Tiffany, which ranked 19th overall with a score of 118. “A jewel of a mobile app and smart digital cross promotion,” the survey noted.

Even e-commerce diamond jewelry standout, Blue Nile, took a hit in the survey, ranking 38th overall, which places it in the “Average” category with a score of 98. “Dated site for a child of the medium,” according to the L2 survey. Ouch.  

Others getting an average grade are

* 43 Cartier, score of 96, “Good-looking, but faulty site mechanics;”

* 45 Swarovski, 94, “Social media properties shimmer, but site has lost its sparkle;” and

* 47 Swatch, 92, “Multi-site e-commerce navigation lacks intuition.”

Zales Jewelers, which ranked 52nd, was the only watch and jewelry brand in the “Challenged” category with a score of 83; “Enhancing mobile and YouTube offering would help.”

Then there’s Tourneau, which ranked dead last in the survey at 64th with a score of 43. It is one of only two brands to place in the “Feeble” category for failing to have an e-commerce site. “Clock is ticking before getting completely left behind,” the survey states.

No jewelry and watch brands made the Genius category.

“On average, users spend more time on brand sites with higher Digital IQs,” L2 said in its survey. “This uptick in site visits also translates to more site visits per user and higher frequency visits.”

There is some good news in the survey for jewelry and watch brands. It includes:

* Tiffany & Co. is among those considered a facebook overachiever based on its facebook page popularity;

* Swarovski facebook page attracted nearly 1.3 million "Likes," the ninth highest among those surveyed.

* Cartier has one of the fastest growing twitter accounts, ranking eighth overall;

* Cartier ranks third and Tiffany ranks fifth among brands with the most upload views on YouTube; and

* Cartier's Calibre de Cartier, Mechanics of Passion, (Short Version) Youtube video is among the most popular brand videos, ranking eighth, with more than 1.3 million views.

Other survey highlights after the page break:

* The top three companies in the survey and the ones only earning a spot in “Genius” category are Macy’s, Victoria’s Secret and Nordstrom. Rounding out the top five are Sephora and Urban Outfitters.

Apart from search engines, facebook is the leading source of both upstream and downstream traffic to and from nearly every retailer’s site.

* Examination of retailers’ facebook walls reveals that fans are most receptive to product-related messaging.

* Thirteen percent of brands surveyed are on the cusp of breaking into f-commerce, offering heavily curated product catalogs with live links from their facebook page to product pages on their e-commerce site.

* The most profound shift from the 2010 Index was the pace of mobile adoption across platforms. In last year’s study, less than 30 percent of brands were optimized for a mobile platform. This year 67 percent of brands support a mobile site, and nearly 45 percent have an iPhone app. Adoption of the iPad is nascent, but rapidly gaining momentum, growing six-fold since 2010.

* “A missed opportunity for retailers in mobile is Android adoption,” L2 said in its survey. Android users’ ad impression share surpassed that of iOS mobile users in December 2010. In April, Nielsen reported that more consumers plan to buy a smartphone powered by Android than any other OS.8 Gilt Groupe, Rue La La, and Macy’s were the only brands in the study to offer any type of Android app.

Signet Q2 Same Store Sales Up 10%, Total Sales Up 11%

Kay Jewelers brought in $367.5 million in the second quarter for its parent company, Signet Jewelers.

Signet Jewelers Ltd., the world’s largest specialty retail jeweler, reported that year-over-year same store sales increased 9.9 percent and total sales rose 10.8 percent to $797.6 million for the second quarter of 2011. Total income before taxes jumped 82.4 percent to $99.8 million for the period ended July 30. Net income for the period increased 71.3 percent to $66.3 million.

The Hamilton, Bermuda-based company owns some of the largest jewelry retail chains in the U.S. and the U.K. that total 1,850 stores. Its shares trade on the New York Stock Exchange.

“I am pleased to announce record results for the second quarter reflecting the ongoing success of our strategies to present differentiated and sought-after product ranges, develop compelling branded offerings, provide a superior in-store customer experience and execute inspiring marketing campaigns,” said Mike Barnes, Signet CEO. “This powerful combination drove a … 430 basis point increase in operating margin and a 68.9 percent rise in diluted earnings per share as compared to the second quarter last year. During the quarter, our branded jewelry initiatives drove strong US same store sales performance and assisted our UK division’s sales to outperform a challenging retail marketplace. I would like to thank all team members at Signet who contributed to this great performance.”

In the U.S., which accounted for 80.6 percent of group sales in the second quarter, sales rose 11.3 percent to $643 million. Same store sales for the period increased 12.2 percent. In the U.S., Signet owns 1,314 stores that include Kay Jewelers, Jared The Galleria Of Jewelry, and a number of regional names. Kay Jewelers led the way with $367.5 million in the quarter. It’s average selling price per unit was $391. The more high-end Jared chain reported total sales of $213.8 million, with an average selling price per unit of $834.

In the U.K., which accounted for 19.4 percent of total sales for the second quarter, sales were basically flat, rising 0.1 percent to $154.6 million at constant exchange rates. At reported rates, sales increased 8.8 percent. Same store sales rose 1.4 percent for the period. In the U.K., Signet owns 536 stores, including the H.Samuel, Ernest Jones and Leslie Davis jewelry retail chains. H.Samuel reported $81.4 million for the period and an average unit selling price of 62 pounds ($101.50) sterling. Ernest Jones had sales of $73.2 million and an average unit selling price of 276 pounds ($451.60).

In a conference call Thursday morning, Barnes said website sales increased 50 percent and that it will be upgrading its websites prior to the holiday season. "That’s where the world is going now and we will focus on investing in it in both in the U.K. and the U.S. markets."

Free cash flow for the period was $153.8 million (26 weeks ended July 31, 2010: $240.2 million); non-GAAP measure, see Note 3. Free cash flow for Fiscal 2012 is estimated at $175 million to $225 million, an increase from the previous estimate of $150 million to $200 million. At July 30, 2011, Signet had no long term debt (July 31, 2010: $229.1 million) and cash and cash equivalents of $440.2 million (July 31, 2010: $485.4 million).

In the second quarter, Signet’s gross margin increased 24.3 percent to $294.8 million. Signet’s gross margin rate increased by 400 basis points to 37 percent, compared with a gross margin rate of 33 percent for the second quarter of 2010. The U.S. division’s gross merchandise margin was up 110 basis points, benefiting from selective price increases and reduced discounting, which more than offset higher commodity costs. The U.K. division’s gross merchandise margin declined by 40 basis points, with the impact of an increase in the cost of commodities and a higher value added tax rate, being largely offset by a number of price increases.

32-Ct. Fancy Vivid Yellow Diamond May Fetch $8M at Christie's Auction

The Vivid Yellow, a rare, highly saturated, fancy vivid yellow diamond of 32.77 carats will be the star lot of Christie’s New York Magnificent Jewels sale on October 18. The golden yellow hue of this large pear-shaped stone is so intense and so deep that the Gemological Institute of America ranks it among the rarest of gemstones in its class. The stone is expected to achieve in excess of $6 million.

“The Vivid Yellow literally blazes with color, unlike any yellow diamond I’ve ever seen,” said Rahul Kadakia, head of Jewelry for Christie’s Americas. “In the world of diamonds, a naturally colored stone of this incredible color and size represents a freak occurrence—an extremely rare geological phenomenon.”

Yellow diamonds gain their color from nitrogen replacing carbon atoms in the diamond’s structure. Where there is less nitrogen present, the resulting stone may be light or “faint” in color. In the case of The Vivid Yellow, the stone’s atoms absorbed an unusually high level of aggregated nitrogen, giving it a saturated golden yellow color.

The uncommon nature of this particular diamond’s color intensity has been reconfirmed by the GIA, whose gem laboratory is devoted to the grading and identifying of important diamonds. In its grading report for the stone, the GIA classifies the diamond as “Fancy Vivid”—the highest saturation one can find in a colored diamond. Only about one in 10 million diamonds possesses a color pure enough to qualify as fancy vivid.

In addition, the report notes that the original rough stone from which The Vivid Yellow was cut must have possessed an extraordinary intensity and thus required no modified faceting in the cutting process to help bring out the color.

“Large fancy vivid yellow diamonds such as this pear shape are rarely encountered at the GIA and come to market very infrequently,” the report states.

The unmounted diamond, which is about the size and shape of a guitar pick, will be part of Christie’s first major jewelry sale of the fall 2011 auction season, slated to take place October 18, at Christie’s Rockefeller Plaza flagship in New York. The international auction house said the stone has the potential to surpass the per-carat price of $203,000 achieved for The Golden Drop, a pear-shaped yellow diamond of 18.49 carats sold in 1990 at Christie’s London.

Christie’s has arranged a global preview tour of the diamond prior to its sale. The diamond will be on view at the following dates and locations:

Christie’s London, August 30 and 31

Christie’s Geneva, September 12 and 13

Christie’s Hong Kong, September 15 and 16

Christie’s New York, October 14 through 17

Princess Charlene of Monaco Prefers Van Cleef & Arpels

Princess Charlene and Prince Albert unveil the Alambra display at Van Cleef  & Arpels boutique in Monaco.

Earlier this month, Princess Charlene and Prince Albert of Monaco helped to inaugurate the Van Cleef & Arpels boutique in the Principality. The occasion allowed the creator of haute joaillerie to introduce a new interpretation its iconic Alhambra motif in honor of the Princess. The necklace and earrings set is adorned with pavé diamonds and turquoises, and evokes the blue waters of Monaco, the company said in a statement.

Van Cleef & Arpels introduced the Alhambra collection in 1968. Its trademark is a setting technique that minimizes the amount of metal, thus emphasizing the diamonds. The stones are selected in different sizes to enhance their sparkle. The exclusive honeycomb open-work setting allows more light to refract into the diamonds. 

Princess Charlene wears the new Alhambra necklace at the Van Cleef & Arpels boutique.

A limited edition of 15 sets will be sold exclusively in the Monaco boutique. A portion of the sales will go to the associations and foundations that have the endorsement of Princess Charlene.

Also earlier this month, the princess wore the Océan necklace at the Monaco Red Cross Ball charity gala. The diamond and sapphire necklace, which can be transformed into a tiara, was a gift from Prince Albert to Princess Charlene following their wedding in early July. The name of the bold, glittering jewelry piece was chosen by Prince Albert. Its sparkle is reportedly the result of 1,200 precious stones that include 88 round diamonds, 10 pear-shaped diamonds and 359 sapphires.

Princess Charlene wears the Ocean necklace at the Monaco Red Cross Ball.

Van Cleef & Arpels has been the “Official Supplier” to the Principality of Monoco since 1956.

Rare Patek Philippe Watches to Star in Antiquorum's September Auction

Patek Philippe Ref. 2499

Two Patek Philippe watches will share the starring role at the upcoming "Important Modern & Vintage Timepieces" auction by Antiquorum Auctioneers.

The September 14 event at the watch auctioneer’s New York headquarters will be led by a Patek Philippe ref. 2499 and an extremely rare and probably unique Patek Philippe Split-Second Chronograph Ref. 1436. In addition, the auction will feature two Rolexes, two Breguets, an Audemars Piguet and two more Pateks, among a diverse collection of modern and vintage timepieces. Previews will be held in Hong Kong, Shanghai, Singapore and New York.

The highlight of the sale is the Patek Philippe Ref. 2499, third series (top picture), originally from the collection of professor Thomas Engel. Made in 1976, this is an exceptional and extremely rare, 18k yellow gold wristwatch with round button chronograph, perpetual calendar, and moon phases. Auction estimate is $300,000 - $500,000.

Patek Philippe Ref. 1436

In addition, there's the Patek Philippe Ref. 1436 (above) made in 1960 and sold by Tiffany & Co. the following year. Antiquorum said the watch has remained in pristine, virtually new condition. The model, probably unique, is an 18k yellow gold wristwatch with transitional dial, square button co-axial split-seconds chronograph and tachometer. Auction estimate is $200,000 - $300,000

Other auction highlights include:

A Rolex Daytona, Ref. 6241 retailed by Tiffany & Co. Made circa 1967, it is a very fine and rare, water-resistant, 14k yellow gold wristwatch with round button chronograph, and anti-reflective black bezel. It is accompanied by a Rolex service invoice and guarantee dated June 21, 2011. Estimate: $40,000 - $60,000

A set of two Breguet Souscription watches made in the late 1990s. The set consists of: A platinum minute-repeating wristwatch with perpetual calendar, phases and age of the moon and leap year indication; and a platinum self-winding pocket watch with 45 hour power reserve indication, instantaneous calendar, phases and age of the moon. This set is accompanied by a fitted wooden winding box, 30 cm platinum chain, platinum magnifying glass and two platinum tools. Estimate: $120,000 - $140,000

A Patek Philippe Ref. 3971 very fine, astronomic, 18k yellow gold wristwatch with round button chronograph features a perpetual calendar and moon phases. It was made in 1989. Estimate: $80,000 - $100,000

 An International Watch Company B-Uhr World War II German Air Force (Luftwaffe), Ref. 431, request No. FL 23883. Made in 1940 for the German Air Force, it is an oversized, center seconds, anti-magnetic, anti-corrosion stainless steel military pilot's wristwatch with indirect seconds and a very long aviator's leather strap. This very rare and sought-after timepiece is accompanied by the certificate of origin and an IWC service warranty dated April 4th, 1989. Estimate: $40,000 - $60,000

A Rolex Submariner Ref. 6538 James Bond, "Big Crown" with gilt dial, made in 1956. This very rare, center seconds, self-winding, water resistant, stainless steel diver's wristwatch with a stainless steel Rolex expandable rivet bracelet is offered with original box, instructions and pamphlets with anchor, guarantee, pocket calendar, and service receipt dated July 21, 1981. Estimate: $35,000 - $65,000

A limited edition Patek Philippe Ref. 5038 self-winding 18k white gold wristwatch. It was made in a limited edition of 500 in 1996 and features a perpetual calendar and moon phases. It is offered with the original winding box, setting pin, limited series certificate, booklets and certificate of origin within a leather wallet. Estimate: $35,000 - $55,000

An Audemars Piguet Royal Oak “City of Sails,” Ref. 25979 made in a limited edition of 50 for the 30th Anniversary of the Royal Oak in 2003. It is dedicated to the "Alinghi" team, winner of the America's Cup in 2003. Estimate: $40,000 - $60,000

‘The Collection of Elizabeth Taylor’ Tour Dates Announced

Photo Credit: Christie's

Admirers of Elizabeth Taylor will have a chance to view many of her most cherished items as they will appear on a world tour before going up for auction at Christie’s.

The international auction house unveiled the dates of a landmark series of public exhibitions and special events around the world. The tour will begin in Moscow and go through major cities in Europe, Asia the Middle East and the U.S. before returning to New York for a final 10-day exhibition and the four-day sale at Christie’s Rockefeller Center headquarters in December. The auction house will devote its gallery space to the exhibition and sale to what it is calling, "The Collection of Elizabeth Taylor."

Photo Credit: MPTV images

Christie’s said it will donate a portion of the money generated through exhibition admissions, events and publications to The Elizabeth Taylor AIDS Foundation. Founded in l991, ETAF provides funding to AIDS service organizations throughout the world to assist those living with HIV and AIDS.

The exhibition tour schedule and sale dates are as follows:

Moscow:

September 15-16

GUM, Red Square 3

London:

September 24-26

Christie's, 8 King Street, St. James’s

Los Angeles:

October 13-16

Venue TBD

Dubai:

October 23

Jumeirah Emirates Towers

Geneva:

November 11-12

Four Seasons Hotel, 33 quai des Bergues

Paris:

November 16-17

Christie's, 9 avenue Matignon

Hong Kong:

November 24-27

Hong Kong Convention and Exhibition Center

New York:

December 3-12

Christie's, 20 Rockefeller Plaza

The Legendary Jewels, Evening Sale, December 13

Jewelry (Sessions II & II), December 14

The Icon and her Haute Couture, Evening Sale, December 14

Fashion and Accessories (Sessions II, III & IV), December 15

Fine and Decorative Art & Film Memorabilia, December 16, including costumes

U.S. Gold Jewelry Demand Down 8%; Global Jewelry Demand Up 6%; India Accounts for 32% of Demand

Gold jewelry demand in the U.S. fell 8 percent, year-over-year, to 21.7 metric tons for the second quarter of 2011, the World Gold Council said Thursday. However, in value terms, demand strengthened by 15 percent to $1.1 billion, which mostly reflects a 26 percent increase in the price of gold during the period.

“The combination of high unemployment, frail economic growth and stubborn inflation pressures produced an environment that was not favorable for gold jewelry demand,” the WGC said in its Gold Demand Trends report for the second quarter of 2011. “The quarter was characterized by continued thrifting among retailers among retailers in order to meet affordable price points and 10k items were encroaching 14k market share.”

The report went on to note that gold jewelry was facing “stiff competition” from silver, and specifically cited jewelry maker, Pandora, which specializes in silver charms. However, this company has lost some of its luster in recent weeks.

Overall global gold jewelry demand rose by 6 percent, year-over-year, to 442.5 tons, equivalent to $21.4 billion in value—led by India, which accounted for 32 percent of global jewelry demand, WGC said.

Gold jewelry demand in India rose 17 percent in the second quarter, compared with a relatively weak year-earlier period. In value, the rise was 42 percent for the period. The WGC noted that the Akshaya Tritya festival in May (traditionally a key gold jewelry buying occasion on the Hindu calendar) “stimulated a surge of buying.”

In China, jewelry demand in the second quarter, normally a quiet period, rose 16 percent, year-over-year, to 102.9 tons, WGC said. The local currency value of demand increased 40 percent, year-over-year, for the period. Demand for 24k and 18k gold in China represents gold's attraction as both an investment and as a reflection of the demand for better-quality jewelry.

“Increasing prosperity among Chinese consumers, supported by very strong growth in the domestic economy, is still a driving force behind gold jewelry demand,” the WGC said.

Among the European markets, Russia was the only country to experience limited growth for the second quarter, WGC said. Demand was “marginally higher” at 16.9 tons, which translated to growth in value of 27 percent. However, the WGC said that year-to-date imports have grown considerably in Russia as its economy improves.

The second quarter was weak for both Italy and the United Kingdom, with demand falling by 15 percent and 16 percent, respectively. In value, demand fell by 6 percent in Italy and 4 percent in the U.K. The report cites rising gold prices and continued economic weakness as the culprits.

Demand in Turkey was “unexpectedly” robust during the second quarter, up 7 percent to 17.4 tons, equivalent to 38 percent growth in value. Consumers purchased 22k gold jewelry during period of the quarter when gold prices dropped several times in May and June.

Among other Asian markets, gold jewelry demand fell 9 percent to 1.9 tons in Taiwan due to the rising price of the precious metal. However, gold demand for wedding sets grew 10 percent for the period.

In Japan, gold jewelry demand dropped 14 percent to 4.2 tons as consumers are still suffering from the March earthquake and tsunami, WGC said. In value terms, the decline was a more modest 4 percent. The WGC noted some “encouraging” signs in the Japanese market with increased demand for “very-high-end” jewelry and in gold chains, purchased more for investment purposes than adornment.

In the remaining markets in the Southeast region, gold jewelry fell due to its high price. Thailand, Indonesia and Korea reported year-over-year declines of 5 percent, 3 percent and 2 percent, respectively. In value terms, demand grew between 19 percent and 23 percent.

An exception for the region was Vietnam, where demand grew by 6 percent, year-over-year, to 3.3 tons, WGC said. This increase was concentrated in “chi” rings (plain 24k rings).

Middle East markets experienced weak second quarters. In Saudi Arabia, jewelry demand fell 16 percent to 21 tons, the largest drop in the region. Demand fell in Egypt by 8 percent to 8.3 tons. Demand from the other Gulf countries fell 4 percent to 4.9 tons. The most resilient market was the United Arab Emirates, I which demand fell by 1 percent to 16.1 tons.

Global gold demand for the second quarter of 2011 fell 17 percent year-over-year to 919.8 metric tons, according to the WGC Trends report. However, the value of the precious metal grew 5 percent to $44.5 billion—the second highest quarterly value on record due to the 26 percent increase in the price of gold during the period. Read more about the overall gold trends on my Forbes.com blog.

Danish Authorities Investigate Pandora’s IPO

One of the largest IPOs in 2010 is now being investigated by the Danish government.

The Danish Financial Supervisory Authority, the country’s market regulator, said Tuesday they will ask police to investigate Nordea Bank Denmark, a unit of Sweden's Nordea, for failing to report its financial interest in jewelry maker Pandora in an investment analysis prior to the  company’s float in October, Reuters reports.

The FSA said at the time of the analysis, Nordea’s indirect ownership in Pandora was 3.9 percent, the FSA reportedly said. Before the company was listed on the Copenhagen stock exchange, that stake was worth around 1.23 billion Danish crowns ($238.5 million).

“It is the FSA's evaluation that the general disclaimer does not sufficiently live up to the notice requirements regarding the announcement of significant financial interests,” the FSA reportedly said in a statement.

Nordea has reportedly admitted fault and said it will “adjust” its notification policy.

Nordea was one of the arrangers of Pandora’s IPO on the Copenhagen Stock Exchange in October, Reuters reports. That float raised $2.1 billion for the company, known for its popular charm jewelry. It was the fourth largest IPO in Europe in 2010.

The company, which designs its jewelry at its Copenhagen’s headquarters and makes them in cost-friendly Thailand, was flying high following the IPO with earnings reports touting spectacular growth until August 2, when the company released its second quarter report two weeks early with less than expected growth as well as declines in major markets. It drastically downgraded its sales and profits targets for 2011 from a revenue growth of no less than 30 percent to 0; and noted that sales fell 30 percent in July.

The profit warning caused the company’s stock to drop 70 percent in less than a day. Since its IPO, the company has reportedly lost 80 percent of its value.

Goshwara Strives for Perfection with its Colorful, Gemstone Jewelry

Emerald tassel earrings with diamonds and onyx Trim in 18k gold from the G-One collection.

Perfection is elusive and almost impossible to attain. But that doesn’t mean one shouldn’t strive for it. Goshwara was the term used to describe a perfect teardrop shape in the court of Persian and Indian kings and is still used among those who work in gem cutting and polishing factories. It is also the name of a young jewelry brand that specializes in colorful gemstone jewelry.

Blue topaz and peridot cab drop earrings with diamonds in 18k white gold from the Naughty collection.

Sweta Jain, the head designer for the New York-based company, was raised in the jewelry and gemstone business. Her father is a colored stone dealer and manufacturer and Sweta spent her childhood helping him wash and assort rough emeralds, visiting gem mines with him in Africa, and learning manufacturing techniques in cutting factories in Jaipur, India. This first-hand education gave her a well-rounded background in sourcing, cutting and polishing gems; and designing jewelry around the stones.

Large fluted bead necklaces with stone and gold rondels in 18k yellow gold from the Saffa collection.

This process of sourcing and polishing and then creating jewelry is difficult. Sourcing different types of gemstones involves working with dealers in various parts of the world. Cutting and polishing requires a different skill set and another group of companies to deal with. Then, one must work with jewelry designers and manufacturers to actually create the finished product. It’s an inefficient system that makes it difficult to control costs, quality and reliability.

Carved emerald ring with rubies and diamond in platinum from the One collection.

Goshwara is able to control much of this process through its parent company, Lush, also based in New York. Having a jewelry company in house with stone polishing and jewelry manufacturing capabilities has created an efficient operation in which Jain can design jewelry to better reflect her personal style and philosophy.

Blue Topaz and amethyst cushion bracelet with diamond toggle in 18k white gold from the Gossip collection.

“I always want colors to be the highlight of my jewelry; hence I create jewelry pieces that are simple in design, yet are bold and fun and make a fashion statement,” Jain says. “Above all I always want my jewelry to be comfortable.”

Peridot and rubelite necklace from the Beyond collection.

Mixing colors is certainly an important part of the design philosophy and using a variety of gemstones with different cuts and finishes brings a myriad of combinations. “I love to mix colors, and always feel that colors have the ability to change and reflect moods and highlight moments in an individual’s life,” Jain says.

Tumbled amethyst earrings in 18K gold from the Freedom collection.

The cutting and polishing skills are exceptional. Cabochons are polished to varying degrees of translucency or to varying degrees of darkness. Faceted gems sparkle. Emeralds and Mandarin garnet beads glitter.

Cabochon bracelet and amethyst rubelite with diamonds in 18k yellow gold from the Rock n Roll collection.

The combination of design skills and craftsmanship may not reach perfection, but it comes close.

Multi-disc chain necklace in 18k yellow gold from the Mischief collection.