Tiffany & Company (TIF), a high-end jewelry designer, manufacturer and retailer, recently signed a deal with Kimberley Diamond Co., a unit of Gem Diamonds Ltd, whereby the latter will supply fancy yellow diamonds to the former for five years. However, the terms of the agreement were not disclosed.
Gem Diamonds through its Ellendale mine in Western Australia will supply the diamonds to Laurelton Diamonds Inc, the Tiffany’s diamond sourcing and polishing unit. Tiffany has entered into a contract to purchase all the fancy yellow diamonds to be mined throughout the economic life of Ellendale mine, which is expected to be five years.
Tiffany will pay the full market price for the diamonds, which will be reviewed after every six months.
The jewelry market has been hit hard by the global meltdown, as consumers affected by lower discretionary income have been prioritizing their purchases. This has led many other retailers to shut stores or wind-up operations. The elimination of stiff competition had helped big players like Tiffany, which holds a significant position in the world jewelry market and is poised to benefit from its increased geographic reach when the economy rebounds. To weather the downturn, it has been concentrating more on smaller size store formats that offer selected collections of lower priced higher-margin products.
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