10 Things Rocking the Industry

1. Comebacks

After going Chapter 11 twice, being unceremoniously liquidated in 2009, and then having its name revived by its founding family, Fortunoff is ­coming back to the jewelry market. The new version of the company—a legend in Northeast retail known for its tagline “The Source”—will be run by Four Leaf Designs, a partnership between siblings Esther and David Fortunoff and the principals of jewelry manufacturer Clover II. Initial plans call for an e-commerce site (set to go live in November), followed by stores in mid-2011, most likely in New York, New Jersey, and Connecticut.

 

2. Estate Tax

A high-profile press teleconference urging reinstatement of the lapsed federal estate tax drew media attention less than four months before the midterm elections. The July 21 event, sponsored by the pro–estate tax organization United for a Fair Economy, featured former Treasury Secretary ­Robert Rubin, AFL-CIO president Richard Trumka, Disney heiress Abigail Disney, and hedge-fund guru Julian Robertson, all of whom advocate reinstatement of the tax, which—unless Congress acts—will return next year at a rate of 55 percent and an exemption of only $1 million.

 
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3. Diamonds

The industry’s least favorite topic—conflict diamonds—grabbed the headlines again this summer, thanks to the unusual spectacle of a supermodel testifying at a war crimes trial. On Aug. 4, Naomi Campbell staged a command performance at trial of Charles Taylor at the Special Court for Sierra Leone in the Hague. Campbell told the tribunal that, in 1997, after meeting the former Liberian president at a party for Nelson Mandela, an assistant to Taylor gave her several “dirty looking stones,” which now would be classified as “blood” gems (even if that term didn’t come into widespread usage until the late 1990s). Prosecutors hoped Campbell’s account would link Taylor to the Sierra Leone gem trade—but couldn’t have been happy when her former agent disputed her testimony four days later.


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4. Sales

Looks like the summer doldrums were in effect in early July, when consumer sentiment fell to its lowest point in 11 months, according to a Thomson Reuters/University of Michigan survey of consumers. The preliminary July figure of 66.5 was particularly significant given the June reading of 76—the survey’s highest in nearly two and a half years.


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5. Acquisitions

Avon is calling, and Silpada answered the door. The 124-year-old cosmetics giant recently agreed to purchase all the assets of Silpada Designs, making these two direct-sales entities one mighty contender in jewelry. In just 11 years, Silpada has become a force in the jewelry world, stealing business from many independent retailers and other purveyors of silver jewels. CEO and co-founder Jerry Kelly sees his brand not as a threat, but as offering “something for everyone.” Silpada’s variety and über-accessible price points—its 450 styles of sterling silver jewelry are priced at $12–$279, with an average ticket of $66—bring in $230 million annually. Silpada, known for its party-plan sales model versus Avon’s person-to-person style, will remain a stand-alone business. Kelly told JCK that one of the company’s long-term goals is to share Silpada “with women everywhere for decades to come.” Translation: global jewelry domination, one Saturday afternoon bracelet sale at a time.


Silpada stabilized turquoise and sterling silver ring; $89 

6. De Beers

De Beers CEO Gareth Penny, a prime ­architect of its revolutionary Supplier of Choice policy (see “Diamond Anniversary”), announced his resignation on July 23. Until a successor is named, chief financial officer Stuart Brown and chief commercial officer Bruce Cleaver will serve as acting joint CEOs. De Beers sources noted that Penny had always said he wanted to serve as CEO for five years. Penny worked for De Beers for 22 years and led the company for five.

 

7. Charity

Jewelers for Children will launch a consumer and trade advertising campaign this fall that aims to increase charitable participation from customers and retailers alike. The group’s goal: to inspire shoppers to ask local jewelers how to help and to increase independent jeweler participation from 10 percent to 30 ­percent by year’s end. Look for the ads in the September–December issues of such glossies as Harper’s Bazaar, ­Departures, and InStyle.

 
JFC benefits charities like Autism Speaks and the Make-A-Wish Foundation. 

 8. Gold

Do you know where your gold comes from? The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act includes a clause requiring “those who file with the SEC and use minerals originating in the Democratic Republic of Congo in manufacturing to disclose measures taken to exercise due diligence on the source and chain of custody of the materials and the products manufactured,” according to the act’s official brief summary. The provision—added to prevent gold and other minerals from subsidizing conflict in the Democratic Republic of Congo and nine neighboring countries—affects only jewelry or jewelry-related companies that are publicly traded on a U.S. stock exchange.

 
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9. Legislation

Surfing the Web for bargain-basement bling could get a lot tougher. On July 1, Rep. ­William Delahunt (D-Mass.) introduced the Main Street Fairness Act (H.R. 5660), which would allow states to collect sales tax for online purchases. (Currently, remote sellers aren’t required to levy state taxes, per a 1992 Supreme Court ruling.) Jewelers of America has announced its support of the bill.

 

10. Stats

With 61 fewer store closings in ’10 than ’09, “You have to say that things are better,” says Jewelers Board of Trade president Dione Kenyon. “Bankruptcies are down almost 50 percent. They were rising quite precipitously a year ago.” And though retailers are doing better, “wholesalers and manufacturers are doing worse. While the economy is improving, it’s not improving quick enough for some.”