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The 3 biggest stories of 2014
Earlier this year, it would have been hard to believe that anything could top the consolidation of the industry’s two largest players, Zale Corp. and Signet Jewelers Ltd., in terms of news for 2014.
Little did I know what lay ahead, as 2014 would be the year the issue of diamond over-grading would erupt and Hearts on Fire would head overseas.
Here are what I believe to be the three biggest stories of the year, in order of importance.
Enjoy, share feedback and, most of all, have a happy holiday and a healthy new year.
1. The grading report row reaches a boiling point.
I would say the first major over-grading headline of the year came out of Nashville when a flurry of local news coverage prompted multiple consumers to file lawsuits against an independent jeweler over EGL International-graded diamonds.
One of the attorneys involved later told me that he viewed the Tennessee town as the epicenter of the over-grading furor. It’s not an entirely inaccurate description, though I would compare those lawsuits more to the first domino in a line that was bound to fall at some point than to ground zero for an earthquake.
The lawsuits influenced Martin Rapaport’s decision to pull diamonds graded by any EGL laboratory (including EGL USA, even though it’s an entirely separate lab), which, in turn, spurred the EGL brand owners to bring in a new global manager, Menahem Sevdermish, and to say they were going to scrap the EGL International brand.
Sevdermish initially told JCK in early December that EGL International was “shutting down” but then told me later that same week that while the “EGL International” brand is going away, the fate of the physical lab itself is in the hands of the EGL brand owners. “Whether they are going to dismantle it altogether or whether they are going to do a different thing under new supervision and leadership--whatever they decide,” he said.
Sevdermish also said in that same early December interview that they would stop printing EGL International certificates “within weeks,” which is interesting because news since has surfaced that the EGL brand owners canceled EGL International’s (formerly EGL Israel) licensing agreement before that interview took place, in late November.
The cancellation supposedly means the lab no longer can issue grading reports using the EGL name. However, the gentleman who headed EGL International, Guy Benhamou, has said that
(Neither Sevdermish nor Benhamou responded to request for comment on this blog.)
Someone should call in Judge Judy on this one and some lawyers, for that matter, because it looks like everybody’s going to need them.
Meanwhile, back in the States, one of the attorneys representing three of the consumers who filed suit in Nashville has said that a big plaintiffs’ class-action law firm will be filing suit against EGL International and “major retailers” early next year. (As mentioned above, EGL USA is a completely separate lab and not involved in this lawsuit.)
This is a story we’ll continue to follow in 2015, though I think, above all, there’s one point to be made here. It’s something Sevdermish said in his interview with me with which I agree: There’s no way the EGL brand owners, or anyone else for that matter, can stop people who want to operate a lab and profit from over-grading diamonds.
Retailers need to make sure they are selling diamonds with grading reports that accurately represent the product, period.
2. Mergers and acquisitions.
Though everybody knew it was coming, the February announcement that Signet would be buying Zale Corp. still was big. These are the two largest specialty jewelers in the country, and their merger certainly will lead to even more consolidation.
Though Signet hasn’t given many specifics on its plans for Zale’s stores, I don’t see Signet keeping an under-performing Zales store that is located across the mall hall from a Kay Jewelers store where business is strong, or vice versa. This is another story that will continue making news in 2015.
A few weeks after shareholders agreed and the Signet-Zale deal was finalized, news broke that Chow Tai Fook Jewellery Group Ltd. was acquiring diamond brand Hearts on Fire for $150 million.
The acquisition gives Hearts on Fire solid financial backing and a foothold for expanding in the Chinese market while Chow Tai Fook gets a strong brand to promote and sell in its stores, in a culture that’s crazy for brands.
No sooner had I begun pondering the next big deal of the year (and recounting past horrors with champagne) when news broke that a private equity firm was buying the John Hardy brand for an undisclosed sum and appointing former American Eagle Outfitters chief Robert Hanson as CEO.
So, what will 2015 bring? Changes for Tiffany & Co. or David Yurman? It’s hard to say, though I would conjecture that the era of consolidation and acquisitions for the jewelry industry is far from over.
3. Wearable technology steps into the spotlight.
There’s Ringly, the ring that connects to the wearer’s smartphone to notify them about meetings, text messages, phone calls and more; Galatea’s new Momento collection of pearl jewelry that play back recorded messages; and, of course, the Apple Watch.
This is hardly an exhaustive list but it does prove a point: wearable technology--devices that can monitor the wearer’s activity level or let him/her hear a message from their mother whenever they want, among many other functions--is here to stay.
And these pieces are being created using fine materials. Galatea’s Momento collection, for example, uses freshwater and Tahitian pearls set in 14-karat gold with prices starting at $350 while the Apple Watch comes in 18-karat gold and, as one retailer already has shown us, can be upgraded.
Spoiler alert/early Christmas present: I have a writer working on a wearable technology spread right now for the February edition of our new digital magazine (another one of the year’s great headlines.)
In the meantime, happy holidays everyone! See you in 2015.
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