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Forbes article on Laurence Graff
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JohnQuixote
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Great article. I knew he had a winery, but didn't know it was in SA. I'll ask Brian to pick up a "nice Graff red" in Johannesberg. Do you think he puts a rough diamond in the bottom (kind of like a tequila/worm)?
Some good insight for those who wonder how margins differ at places like T&C/Cartier. Also, very pertinent observations about larger sizes, pricing and rarity.
Indeed, on very large stones of 20 carats and up it may make sense for a jeweler to take no profit: The monster pieces draw attention to the brand. A 50-carat flawless diamond of the highest clarity might wholesale for $100,000 a carat, or $5 million, and sell at retail for not much more than that. There is still money to be made on the very large pieces, however, by someone who buys rough and takes on the labor and risks of chopping up the rock.
A publicly traded entity like Tiffany has to concern itself with inventory turnover; Graff cavalierly maintains a huge inventory of diamonds, with a retail value, he estimates, of $1.5 billion. The stockpile enables Graff to construct jewelry made up of multiple rare diamonds, like the $30 million necklace he sold late last year that could be worth 20% less if each of the diamonds were sold on its own. These two factors--bulging inventory and vertical integration--help explain why Tiffany's net profit margin sits at 9.6% while Graff puts his at 12%... >>
Some good insight for those who wonder how margins differ at places like T&C/Cartier. Also, very pertinent observations about larger sizes, pricing and rarity.
Indeed, on very large stones of 20 carats and up it may make sense for a jeweler to take no profit: The monster pieces draw attention to the brand. A 50-carat flawless diamond of the highest clarity might wholesale for $100,000 a carat, or $5 million, and sell at retail for not much more than that. There is still money to be made on the very large pieces, however, by someone who buys rough and takes on the labor and risks of chopping up the rock.
A publicly traded entity like Tiffany has to concern itself with inventory turnover; Graff cavalierly maintains a huge inventory of diamonds, with a retail value, he estimates, of $1.5 billion. The stockpile enables Graff to construct jewelry made up of multiple rare diamonds, like the $30 million necklace he sold late last year that could be worth 20% less if each of the diamonds were sold on its own. These two factors--bulging inventory and vertical integration--help explain why Tiffany's net profit margin sits at 9.6% while Graff puts his at 12%... >>
JohnQuixote
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I wouldn't take a single number too literally MrsS. It's likely a Forbes' approximation and can vary by geography anyway: T&C/Cartier are on several continents, including the Far East where the currency is stronger.
Before you get too excited for anyone, remember that margins are shrinking for "average" retailers as much as in any other sector due to vertical integration. Here is a thread from not too long ago with discussion about why prices continue to increase in the USA.
Before you get too excited for anyone, remember that margins are shrinking for "average" retailers as much as in any other sector due to vertical integration. Here is a thread from not too long ago with discussion about why prices continue to increase in the USA.
Nice.Date: 8/2/2007 10:56:03 AM
Author: elmo
Everyone who comes to pricescope ends up 'smart and a serious handler', right?
dunndeal
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The article on Graff is great! It is an inspiration and a great read. It's very true that a lot of larger diamonds (5 carats and above) are sold at very slim margins for bragging rights. Even single digit percentage markups are not uncommon but I figure the cache of Graff allows them to make a little more margin than the rest. Lucky him if he can get close to 20% (from Martin's guesstimate) but hey he's earned it through courage and savvy brand building!
kristy_lyn
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what''s the date for the print issue of this article? My hubby has a subscription, and, I''d like to read it in the mag...
JohnQuixote
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The byline was 7/26 (Susan Adams) but it's in the current issue I believe. Coming soon to a doorstep near you.
kristy_lyn
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thanks!
JohnQuixote
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MrsS, pursuant to our discussion about margins, this from Rapaport today... Large high quality goods in short supply driving up prices for 5ct+ sizes.
(again. caramba.)
Those who can't survive without that nice pair of 10ctw earrings should jump now.
Those who can't survive without that nice pair of 10ctw earrings should jump now.
mrssalvo
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Date: 8/3/2007 11:17:23 AM
Author: JohnQuixote
MrsS, pursuant to our discussion about margins, this from Rapaport today... Large high quality goods in short supply driving up prices for 5ct+ sizes.(again. caramba.)
Those who can''t survive without that nice pair of 10ctw earrings should jump now.
well, I''d better tell hubby it''s best to go ahead with our 5+ carat purchases right away
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