NEW YORK--While few fine jewelry and watch firms expect to rack up substantial growth this year, many companies said they feel fairly upbeat about the coming season, due in part to better inventory planning and the prospect of salable trends.There is still plenty of uncertainty in the air stemming from the possibility of more terrorist attacks and an unclear economic picture. However, most firms in the sector said they expect to see some sales gains over last fall, and are planning for increases in the mid-to-low single digits.Robert Chavez, president and ceo at Hermes of Paris, said: "We are finding that people are still interested in making an investment in really high quality products. Business has picked up from where it was and we feel positive about what the second half will bring."Peggy Grosz, co-owner of Italian jeweler Stefan Hafner's U.S. distributor, Bernard Grosz, said: "I feel optimistic about business conditions, as long as the stock market doesn't behave too badly. But we have seen that retailers are being more thoughtful in their planning and are really putting inventory dollars where they see turn and growth."Continuing the prevailing trend of recent months, vendors said stores are keeping their inventories lean for the season and are cherry picking trends rather than trying to cram many styles into their counters. Fashion styles for fall and holiday are focused on bold looks, including large diamonds, yellow gold, big stones and large watch dials. The hot watch category is seeing an influx of new players and many companies said they are expanding and enlarging their collection of timepieces."We are seeing a huge return to glamour," said Andrea Hansen, H. Stern's marketing director for North America. "Much of the looks are more glittery and are sexier and edgier."H. Stern, which now operates 160 stores, is keeping inventory levels consistent with last year, Hansen said. However, the company continues to expand its retail operations and is planning to open its new store in Manhattan's SoHo district this fall. Watches are a key focus for H. Stern in the coming months and a new line has been unveiled that has more contemporary styling.At Harry Winston, the focus for fall and holiday continues to be on diamond jewelry, although watches, which the firm also sells wholesale, are seeing increased attention and have been a standout category lately, according to James Haag, the company's director of global sales and marketing."We have seen more traffic lately and I think people are starting to feel better and are going about their lives," Haag said. "Customers are buying things that are timeless and that have an heirloom quality and we expect that to continue this fall."Other items the firm is banking on are jewelry with diamonds of all sizes, including pink diamonds, as well as pearl earrings and cross jewelry. Winston is also continuing its ad campaign, which was launched last holiday and has been highly successful, according to company executives.Meanwhile, jewelry and watches are also getting more attention at Hermes of Paris, the American arm of the French luxury firm."Interest in our watch category has been very strong and we see watches as a key area of growth," Chavez said.Watches are also sold wholesale and are now available in about 100 doors, and the company sees room to expand that distribution, he said.Hermes is also launching a collection of jewelry for fall from designer Pierre Hardy, which includes yellow gold and silver jewelry and items with semiprecious stones.At Bernard Grosz, Stefan Hafner has expanded the boutique part of his line, which carries lower price points than its core collection, according to Peggy Grosz. Items that have booked well include a collection called Coil, which has a slinky feel, and bracelets have been a standout category. The Stefan Hafner line is now sold in about 60 doors here, and the company is increasing its investment in direct mail and brochures and focusing more on special events, Grosz said.Despite difficult conditions, a few new firms are working to break into the pack. Among the newcomers is Di Modolo, a fine jewelry brand that first hit stores last year. The company is co-owned by Benny Shabtai, who built the Raymond Weil brand, and Dino Midolo, a longtime watch and jewelry designer, who designs the line."We plan to continue expanding our distribution and opening stores in high-profile areas," said Marvin Scherzer, Di Modolo's vice president of marketing and sales. "It is a challenging time to build a brand, but we are such a fresh face in the market and many people are looking for something new."The line is now in about 45 doors, including Saks Fifth Avenue and Mayor's Jewelers, as well as a variety of independent stores. Di Modolo's wide range of products includes jewelry in 18-karat gold, with prices ranging from $1,000 to $3,000.The company is also creating an aggressive advertising campaign this fall, and is planning to start selling overseas, Scherzer said."

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