Graff Diamonds Corp. is the latest firm to feel the chilly wind blowing through the fine jewelry sector.
The luxury firm on Wednesday pulled its planned initial public offering in Hong Kong. The offering was expected to close today following investor meetings in Manhattan when its road show closed, but word trickled out late Tuesday that the high-end jeweler was having trouble receiving orders for the planned offering. RELATED STORY: Graff's IPO Price Turned Off Investors >>
A company spokeswoman said Wednesday night: “Graff Diamonds Corp. confirms that owing to adverse market conditions, it has decided to postpone its planned IPO and listing on the Hong Kong Stock Exchange.”
The company statement noted that it “enjoyed high-quality engagement on its business and strategy from a very broad range of prospective investors. However, consistently declining stock markets proved to be a significant barrier to executing the transaction at this time.”
The spokeswoman said because the decision was made just “hours ago,” there was no timetable for when it might consider a relisting, although that “remains an option.”
The jewelry firm is the first among the luxury-fashion companies seeking to go public to hit a brick wall despite the love that investors seem to have for fashion IPOs. The blockbuster Michael Kors Holdings Ltd. IPO in December had many firms rethinking their strategy and considering whether they too might be able to grab a moment in the IPO spotlight. Kors was followed by comparably successful IPOs by Tumi Holdings Inc. in New York and Brunello Cucinelli SpA in Milan.
There have been signs that the fine jewelry segment is seeing a slowdown, even as the overall luxury goods market appears to still be buoyant. Tiffany & Co. said last week when it posted first-quarter results that decelerating sales in the Americas and Asia-Pacific pushed the New York-based retailer to revise its annual profit guidance lower to between $3.70 and $3.80 a share from a range of $3.95 and $4.05, a far weaker outlook for the year. Signet Jewelers Ltd. said that it experienced a slowdown at the high end of its offering, while Zale Corp. indicated softness in its U.S. business.
The last successful jewelry firm to go public in Hong Kong was Chow Tai Fook Jewellery Group, which enjoys a larger customer base than the ultrahigh-net-worth consumers that Graff targets. Chow Tai Fook went public in December, raising $2 billion.
Market conditions were different then. In Hong Kong, the benchmark Hang Seng Index reached a high at 21,760.34 in mid-February, and has since declined 14.1 percent to 18,690.22 Wednesday.
The global equity markets this week also have been volatile, given the concerns in Europe over the weakness of Spanish banks and the upcoming Greek election.
In Asia, speculation Tuesday that China could be readying a new stimulus package helped to fuel optimism. The Asian market indices ended Tuesday’s trading sessions up, only to fall in trading Wednesday when hopes for Chinese stimulus spending faded.
Graff isn’t the first to pull its planned IPO in Hong Kong either. Copper producing firm China Nonferrous Mining Corp. and automobile dealer China Yongda Automobiles Services both pulled their planned IPOs in the past week.
Executives at the London-based firm, which began their road show last week, were aware of the choppy Hong Kong market conditions, yet elected instead to tout the planned upcoming $1 billion listing on the Hong Kong exchange.
On Sunday, the company known for its collection of large, rare diamonds set a preliminary price range of between 25 Hong Kong dollars, or $3.22, and 37 Hong Kong dollars, or $4.76 per share. Conversions to U.S. dollars are at current exchange. The midpoint at that price range would have valued the jewelry firm at $3.48 billion. The final pricing range was to have been set on Friday, with the first day of public trading set for June 7.
Graff’s chief executive officer François Graff had touted Hong Kong as a “very natural option” for the company’s IPO, in part due to optimism over growth in Asia.
As reported, the company had planned to use the IPO proceeds to repay debts, buy inventory from company founder Laurence Graff’s indirectly controlled firm DiamondWorks and purchase outstanding shares of its Monaco retail operations and Safdico, Graff’s procurement and polishing division, as part of a restructuring program aimed at lifting the company’s profit margins.
One concern voiced by financial analysts in Hong Kong earlier in the week was that Graff has a high sales concentration in Europe and there could be issues over how the economic backdrop there might have on Graff’s business.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)