Hearts On Fire will see “explosive growth” now that Chinese jewelry powerhouse Chow Tai Fook is buying its assets for $150 million in cash, CEO Glenn Rothman told JCK.
“[This gives us the] support of the resources of the largest jewelry company in the world,” an obviously enthused Rothman told JCK in his first interview following the acquisition. “This is the biggest opportunity, the most exciting event in my long career. It’s completely reenergized me. It’s beyond anything I ever dreamed of.”
Chow Tai Fook owns 2,077 jewelry points of sale in Hong Kong and China. In its latest fiscal year, it did approximately $10 billion in business ($77 billion HKD). It is also a major manufacturer and wholesaler with a De Beers sight.
Hearts On Fire will be run as a stand-alone division under current management and stay in its Boston office, with Rothman staying as CEO, he says.
“Our team in Boston will remain completely intact,” he adds. “And, in fact, we are open for hiring. We will be in search of the best and brightest talent in the industry to join us. We want to hire in all aspects of our business: in sales, in technology, in marketing, in design, in finance.”
While former owner Eurostar owned 49 percent of the company, Chow Tai Fook has purchased the entire business.
“What happened was, when I was looking for new investors to fund our Asian expansion, Chow Tai Fook and Hearts On Fire fell in love with each other,” he says. “Their culture is similar to ours. They are passionate, they are energetic, they are fearless, they are innovative. They are open to learning, and they have a great focus on the customer. It’s an amazing organization of young dynamic individuals.”
Hearts On Fire will draw up an entirely new business plan in the weeks to come, Rothman says, noting the company plans to keep focusing on the independent jeweler, expand its retail network, and boost marketing and product development. It will likely slow its plan to build a chain of brand stores. (It currently has stores in Las Vegas and King of Prussia, Pa.)
“Chow Tai Fook has a culture of growth, and they are looking for Hearts On Fire to grow,” Rothman says. “We want to grow exponentially.”
The acquisition also gives HOF a foothold in China and Hong Kong.
Kent Wong, managing director of Chow Tai Fook, told JCK by email that his company wants to make Hearts On Fire a “household name” in China and plans to introduce the brand into its retail network.
“The acquisition allows CTF to introduce a global diamond brand with world-class design and production that is complementary to CTF’s existing high-end luxury segment,” he says. “It is in line with the group’s strategy to optimize product mix and promote higher-value products. The group’s vertically integrated model can potentially benefit from HOF’s know-how and inspiration in jewelry design and craftsmanship.”
Chow Tai Fook is also a major retailer of the Forevermark brand, but Wong says his company plans to keep stocking competing names.
“The HOF brand is a complement to our existing portfolio,” he says. “It appeals to different clientele, and thus should not cause competition.”
Procurement of product will be transitioned to Chow Tai Fook, Rothman says, but notes his company will still work with Eurostar.
HOF recorded audited net sales of $99.3 million and $104.8 million for 2012 and 2013, respectively, according to a Chow Tai Fook statement, which added it expects its new acquisition will make an “immediate positive contribution” to its bottom line.
FACTS ABOUT HEARTS ON FIRE
– Bridal jewelry represents 50 percent of its sales; fashion/classic jewelry, 40 percent; and its designer collection, 10 percent.
– Approximately 75 percent of Hearts On Fire’s jewelry sales in 2013 were priced between $1,000 and $10,000, with most of the remaining sales priced above $10,000.
– The brand has a presence in 31 countries, with the U.S. being the largest market.
– It has two retail stores in the U.S., in Las Vegas and King of Prussia, Pa., and eight in Taiwan.
Source: Chow Tai Fook