Fewer Stores, Tighter Supply, Subtle Shifts

Avi Krawitz
Jul 22
4 min read

Updated: Jul 23

Feeling a bit more upbeat about the market this week, mainly thanks to some encouraging murmurs about a slight uptick in diamond jewelry sales in China.

It’s still far too early to call it a recovery, but it does seem like the market might be finding its footing after a major retail shake-up through 2023 and 2024. I dig into those shifts in China’s Diamond Inventory Dump, sparked by De Beers’ jaw-dropping estimate that around $1 billion worth of goods were net exported from China during that time. With all the noise around synthetics, we’ve arguably underestimated just how much China’s slowdown has weighed on the broader diamond market.

Also this week, I shared a few thoughts on Botswana President Duma Boko’s comments about De Beers’ hold over the country’s diamonds. You can read that in Botswana’s Diamond Obsession: A Shiny Distraction.

And if you're catching up, there’s plenty of earnings news too—from Richemont, Mountain Province Diamonds, Titan Company, Rio Tinto, Burgundy Diamonds, Luk Fook, Swatch Group, JBT, and IGI. That’s all in This Week in Diamonds.

Now, the Pressing Matters at hand.

>>> Less Bad, the New Good in China

Let’s circle back to China—a sort of mini-epilogue to the analysis I shared above. Make no mistake: Asia, and China in particular, continues to weigh heavily on company sales. But there’s been a noticeable shift in how brands are talking about the region.

Perhaps the clearest signal came from Hong Kong-based jeweler Luk Fook Holdings. The company noted that, thanks to an improvement in diamond product sales, it plans to “continue to actively promote fixed-price gold products and fixed-price diamond-set pure gold products,” while also tweaking its product and promotional strategies to boost performance in diamond-set 18K gold.

That optimism came despite some sobering numbers: same-store sales of fixed-price diamond jewelry fell 17% year-on-year in the fiscal quarter ending June 30. Still, that’s actually… an improvement. It's the sixth consecutive quarter of declines, but the previous five saw an average drop of 43%. So the rate of decline is slowing—and in this market, that counts for something.

It’s also the sentiment that matters. Luk Fook has been scaling back its diamond offering over the past two years, so the decision to reinvest in the category marks a noteworthy change in tone.

Swatch Group echoed a similar mood. It reported a 7% decline in sales “exclusively attributable to China,” but also mentioned “first positive signs of improvement, particularly in e-commerce and the reduction of inventories at retailers.” That last bit mirrors what we discussed in China’s Diamond Inventory Dump.

Richemont, on the other hand, stayed silent on any green shoots in China—though to be fair, they tend to keep these trading updates brief and vague.

As I said earlier, it’s too early to declare a trend. But with Chow Tai Fook and LVMH set to report this week or next, we may get a clearer picture. For now, it seems many retailers in China have accepted a new normal of lower demand—and are adjusting their expectations accordingly.

The Group therefore expects an improved market environment in the Greater China region in the second half of the year.

>>> Ekati Put on Ice Amid Ongoing Production Pain

The rate at which diamond mining operations are stalling is increasingly alarming.

The latest example came this past week when Burgundy Diamond Mines scaled back operations at its Ekati mine in Canada’s Northwest Territories, deep in the frozen Arctic Circle, citing weak market conditions. Open-pit mining at the Point Lake kimberlite pipe has been suspended, resulting in layoffs and a reduction in contractor numbers. The company will now shift its focus to processing higher-margin ore from the Misery underground site.

Sustained weakness in diamond prices has pushed once-economically viable projects into obscurity. Only the highest-value and best-managed operations are likely to survive. Expect further declines in global production through the second half of the year. Let’s see if De Beers adjusts its production plan when it reports later this week.

Chart Check

The U.S. jewelry sector continues to shrink. The total number of businesses fell 3.1% year on year to 22,218 in the second quarter, according to the latest data by the Jewelers Board of Trade (JBT). Retailers made up the lion’s share of that figure, down 3% to 16,873. Wholesalers declined 2.6% to 3,241, while the number of manufacturers dropped 4.7% to 2,104.

Coming Up

Don’t forget to sign up for session two of The Business of Jewelry Roundtable. As part of The Diamond Press community, you’re invited to join the conversation. [Learn more here]

Here’s what’s on my radar this week: