DTC Sight 1: Reduced Supply, Shine: Christmas Sales below Expectations

U.S. diamond jewelry Christmas sales fell more than De Beers thought they would, falling 15 percent - 20 percent year-over-year, Diamond Trading Company (DTC) Managing Director Varda Shine said. One of the DTC’s responses is to reduce supply by 50 percent in the first half of the year.

In her speech to DTC Sightholders at a reception Tuesday, Shine said “We do not have a precise read but the percentage decline year on year is likely to fall somewhere between 15% and 20%, leaving the decline for the US market as a whole for the year in the high single digits.”

She added that the number of pieces sold may have not declined, which means that the U.S. consumer spent less on diamond jewelry this past holiday season.

“The need to move those items means that retailers’ margins have suffered and they are not in a position to replenish stock as strongly,” she told the listeners, adding that the diamond business is operating “well below its potential.”

According to Shine, consumer demand will continue to contract this year, but the real challenge is financial liquidity combined with the large polished stock overhang in the pipeline.

In response to the current situation, Shine listed a number of actions that the DTC is taking. It cut supply to about half the goods requested by Sightholders in the Intention to Offer (ITO) for the remainder of the current ITO period - the first three Sights of the year.

The goods are also presented and billed in a different way. They are shown in a less segmented manner, and the invoice will not have a list of charges detailing the price of each box. Moreover, the boxes will no longer be sealed, something that is expected to have an affect on sales to the secondary market.

“The DTC is exploring options for bringing surplus goods to the market once every avenue of Sightholder demand has been satisfied,” Shine said. This means that goods that Sightholders do not buy will be sold directly to the secondary market. This is expected to further impact prices on “the street.”

Another important point by Shine was a promise to continue generic marketing in North America and Forevermark in Asia.

Sightholders say the allocations look good and that the mix of goods seems better, meaning a de facto price reduction. But because the way the goods are shown, it is harder for them to asses how much better.

The desire for goods has not increased since December, and so goods are still being examined before a final decision to buy or not is made.