Diamond Gems Weekly - July 29.
I’ve often referred to Signet Jewelers as the bellwether of US jewelry demand. That’s because it is the largest seller of jewelry in the country by some margin, and it holds a significant market share. It is also a public company, so its performance is easily measured and tracked.
However, I’m rethinking its role as the leading market indicator because Signet has significantly underperformed in the past two years. That’s largely due to its investment in lab-grown diamonds and its exposure to lower tier malls.
Today I believe a better pulse of the American market can be taken through independent jewelers. In fairness, that probably was always the case.
But that’s where we start this week’s roundup of top diamond and jewelry stories:
1. The US jewelry space is showing signs of stability, supported by top-tier independents and the high end. My latest analysis for Rapaport explores the market dynamics in the US, as it has proved, once again, to be A Jewelry Safe Haven.
2. LVMH reported 2% revenue growth in Europe and the US, and 32% growth in Japan in the first half of the year. Revenue in the rest of Asia fell 6%, as the slowdown in China continues to weigh on jewelers operating in the region. Revenue at LVMH’s watch and jewelry division, which includes Bulgari and Tiffany & Co., fell 5% to EUR 5.2 billion, with operating profit down 19% to EUR 877 million.
3. Asia Pacific was also weak for Kering, although so was Europe and North America, while Japan once again outperformed. Boucheron and Pomellato, Kering’s two flagship jewelry brands, were up double digits in the first half, the group said.
4. Chow Tai Fook retail sales dropped 20% in the fiscal first quarter ending June 30, with China down 19% and Hong Kong-Macau declining 29%.
5. Similarly, Luk Fook reported its retail revenue fell 18% year on year in the quarter, with diamond sales down 52%.
6. Meanwhile, the rough market remains challenging, or “a bit of a blood bath,” as one consultant to a tender house put it after July sales remained soft.
7. De Beers reduced its 2024 production plan to 23 to 26 million carats, from the 26 to 29 million carat range, in response to the “prolonged period of lower demand,” and higher than normal levels of midstream inventory. Group revenue fell 21% to $2.25 billion while underlying earnings declined 14% to $73 million in the first half of 2024.
8. Mountain Province Diamonds, a joint owner with De Beers in the Gahcho Kué mine in Canada, reported revenue fell 7% to $41.5 million in the second quarter, noting that “the diamond market continues to be softer than anticipated.”
9. Burgundy Diamonds, owner of the Ekati mine in Canada, reported revenue slumped 27% to $106 million in the second quarter, dragged down by lower volume sold and a 5% drop in the average price achieved. Some interesting insights about the company, the market and the mine here.
10. Similar trends were evident at Lucapa Diamond Company which reported revenue fell 21% to $22.5 million in the second quarter. The company also unveiled a176-carat, type IIa diamond recovered at its Lulo alluvial mine in Angola. The rough, pictured, is the fifth stone larger than 100 carats recovered at Lulo this year.
Image: (Lucara Diamond).
What can I say, I'm a sucker for a big diamond! And considering the rather grim tone coming from the rest of the news, I'll take that as ending on a high.
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