Fossil 2nd Quarter Sales Up 30%

Fashion accessories designer, marketer and distributor Fossil Inc. said net sales increased by 30.6 percent to $412.6 million in the second quarter of the year. The company credits an improving global economy and an increase in watch sales as the cause for the strong results.

The Richardson, Texas-based company said gross profits for the period rose 41.7 percent $236.9 million, or nearly 58 percent of net sales. Operating income increased by 186.3 percent to $64.3 million, or 15.6% of net sales. And, net income increased by 227.8 percent to $54.5 million.

“An improving global economy, a resurgence in the fashion watch category and our laser focus to be a leader in the introduction of new materials and design innovation combined to deliver a 42 percent increase in our wholesale watch business during the second quarter,” said Mike Kovar, Fossil Inc. executive VP and CFO. “We are seeing balanced growth on a global basis and strong momentum among our major watch brands. In our FOSSIL retail and e-commerce channels, double-digit comparable stores sales, in addition to the strong performance in our Fossil brand watch sales, propelled a 28 percent increase in Fossil branded sales globally. All of this places us in excellent shape as we begin the second half of the year.”

The company, best known for its fashion watches, branded jewelry lines and leather goods, reported strong increases in watch sales globally, and to a lesser extent, the growth of the jewelry category in North America and Europe and the expansion of leather categories internationally.

Net sales from the North America wholesale segment for the period rose 37.percent, led by a resurgence in the overall fashion watch category. MICHAEL KORS, FOSSIL and MICHELE watches experienced the strongest performance. In addition, a steady flow of inventory replenishment as opposed to retailers generally de-stocking a year ago resulted in North American watch shipments increasing by 59.2 percent.

Meanwhile, North America wholesale accessory sales volumes increased 1.9 percent, primarily due to increased shipments of FOSSIL women's leather products and the expansion of the company's footwear and accessory jewelry categories, offsetting by a sales volume decline in men's leather products.

Internationally, European second quarter wholesale net sales rose 30 percent. Wholesale watch shipments increased $18.6 million, or 28.9 percent, in constant dollars, with all major watch brands contributing to this increase. Leather and jewelry categories also contributed solid double-digit increases. The largest net sales contributions were FOSSIL watches and jewelry and licensed brand watches led by EMPORIO ARMANI.

Asia Pacific wholesale shipments in the second quarter increased 28.8 percent, in constant dollars, year-over-year, led by watch and leather sales.

Direct to consumer net sales for the period rose 28 percent, or $22.5 million, on a constant dollar basis. Same-store sales gains of 15.5 percent and an 8.4 percent increase in the average number of company-owned stores open during the Second Quarter. Additionally, net sales from the company's e-commerce businesses increased 44.2 percent.

In its guidance, Fossil said it expects reported net sales to increase in a range of 25 percent to 27 percent with constant dollar net sales increasing in a range of 27 percent to 29 percent, respectively. For the fourth quarter, the company said it expects reported net sales to increase in a range of 14 percent to 16 percent with constant dollar sales increasing in a range of 18 percent to 20 percent.

Aaron Shum Jewelry Opens Middle East Headquarters in Dubai

Hong-Kong-based jewelry wholesaler Aaron Shum Jewelry opened an office and showroom in Dubai at Gold Land (pictured) that will feature the company’s collection of jewelry and timepieces.

The Dubai operation will serve as Aaron Shum Jewelry's hub for the Middle East region. The company has an established presence in Hong Kong, Japan, Europe, USA, Australia and China.

“Over the past decade, Aaron Shum Jewelry has forged strong relationships with gold and jewelry retailers, designing and manufacturing exclusive jewelry brands for several leading retailers in the Middle East,” said Aaron Shum, owner of his namesakes company. “With the opening of our Middle East headquarters in Dubai, we are consolidating our presence here and will embark on a focused regional expansion strategy.”

Among the products being showcased at the Dubai headquarters are the Coronet Solitaire, which amalgamates six diamonds on an elevated centerpiece to create a solitaire effect; the Gemtique collection, which features gemstones and jewels, set in variants of 18k white, rose and yellow gold; and the La Posy Collection, which blends colored gemstones and jewels.

Zimbabwe Opens Auctions of Diamonds from the Controversial Marange Fields

Zimbabwe held the first sale of diamonds from its Marange fields since international regulators partially lifted a ban imposed after the military violently seized control of the mines, Agence France-Presse reports.

Update: Estimates of the value of the sale vary from £48 million ($74.7 million) to £1.2 billion ($1.8 billion), according to the UK newspaper, The Independent.

About 900,000 carats valued at about $72 million were on sale Wednesday, according to Abbey Chikane, the monitor from the international Kimberley Process, which is charged with preventing trade in "blood diamonds," the term used for diamonds mined in a war zone and sold to finance an insurgency, invading army's war efforts, or a warlord's activity.

Buyers from the United States, Israel, Russia, Lebanon and India were at the auction at Harare's airport, some with pilots waiting to jet them out of the country afterwards. Read more

A Jewelry Comeback for Fortunoff?

Remember Fortunoff? The former New York region department store chain said it will produce fine jewelry to be sold online as early as the fall followed by brick-and-mortar retail outlets in 2011.

The principals behind this new effort are as follows:

Fortunoff Brands, LLC. The Fortunoff and Mayrock families, who owned and operated Fortunoff for four generations, purchased all of the intellectual property of Fortunoff—including the brand name and related trademarks, customer lists, domain names, and all copyrighted material.

Four Leaf Designs, LLC. A partnership between Esther Fortunoff and David Fortunoff, and Lester Friedlander and Shaun Apgar, the principals of Clover II, a jewelry wholesaler and the owners of Robert Lee Morris Inc.

Together they have reached an exclusive agreement with licensing rights to the Fortunoff brand for fine jewelry products in the United States and on the Internet. This new partnership said it will open an e-commerce site followed by stores in their traditional Tri-State market of New York, New Jersey and Connecticut.

The high end retailer liquidated its assets in 2009 after filing for Chapter 11, owing its vendors more than $6 million.

John Ayton's Mentor

The Financial Times  on Wednesday published a story asking five successful entrepreneurs from very different businesses who their mentors were and what they taught them (subscription required). John Ayton, founder of Links of London and Annoushka Jewellery, was one of the persons profiled. His response is below: 

I was a lawyer between 1986 and 1992 before going into business. The person who taught me lessons I have used in my working life was David Macfarlane, a senior partner I shared a room with at Ashurst, the City law firm. When you see someone up close for so much time you end up absorbing some of their traits.

He would find it ironic that I see him as a mentor as, after working with him, I quit law. In fact, he was the one who sat me down and told me I had to choose between law and business – I had started a few entrepreneurial projects, including Links, while a solicitor. We had an amicable divorce, and remained in contact. From him, I learnt how to negotiate and how to see the wood for the trees.

After I sold Links in 2006 I set up Walpole Brands of Tomorrow, which matches mentors with young luxury businesses. Being a mentor is not completely altruistic, as working with small start-ups burgeoning with fresh ideas is invigorating. It also puts you in touch with new markets.

French Luxury Festival to be Held in Dubai

The Dubai Mall will be scene of the region’s first festival hosted by Comité Colbert. The Colbert Festival will be held from October 29 till November 7 at the world’s largest mall.

Comité Colbert is an association of 75 French luxury brands and 11 associate members who collectively promote their shared values in France and internationally.

The Dubai Mall contains more than 1,000 retail stores (including 70 global haute couture brands) and 160 food and beverage outlets. More than 37 million persons visited the mall during its first year of operation.

The French luxury organization and the mall are partnering to bring this event to Dubai. The Colbert Festival consists of a special path that will run past the stores of Colbert members and through the public areas of The Dubai Mall, according to the organizers. Outstanding objects will be displayed, many of them for the first time in the Middle East. There will also be a program of special events and demonstrations including artisans showing their skills or talks by designers.

The festival will be centered in the mall’s Grand Atrium, Fashion Avenue and Catwalk, which features more than 30 French luxury brands.

Oil, Water, Recycled Jewelry, Fashion, Art and Controversy

 

Leave it to the folks of Vogue Italia to create a photo shoot so provocative, compelling, timely and beautiful that the rest of world has little choice but to take notice.

The shoot depicts silver-haired Kristen McMenamy striking poses on an oil-soaked coastline like a dying bird covered in black liquid. The idea, of course, was to imitate the dead and dying oil-covered pelicans that have washed onto the shores of gulf coast since the Deepwater Horizon explosion in April. The 24-page cover spread in the August issue was shot by Steven Meisel, who reportedly has a history of creating edgy, environmentally themed photo shoots.

And there’s a jewelry twist. The necklaces and other jewelry pieces that drape McMenamy like black seaweed were created from recycled inner tubes from the Gulf Coast by Kathleen Nowak Tucci of My Sister’s Art.

The cover spread has drawn a lot of controversy in the U.S., most of it negative. But who cares? There will always be the feeble minded and emotionally squeamish who will hide behind the walls of their own prejudices rather than honestly try to understand what is being communicated. 

Tucci, a Gulf Coast resident, on her Web site addressed the controversy as follows: “I do not consider this fashion editorial to be a glamorization of the oil catastrophe in the Gulf of Mexico. I thought it was disturbing and thought provoking and utterly fascinating in its interpretation of the struggle for survival. It is controversial and interpretative which is indicative of great artistic expression. I am honored to have my work included in this small way toward the significant artistic vision of Steven Meisel and Karl Templer.”

So enjoy the photographs and a video of the shoot for yourself on the Vogue Italia Web site.

And here’s an opinion I like even though she calls the photo spread, “dreadfully ugly.”