NEW YORK — The deal to sell Harry Winston to Aber Diamond Corp. is at least a month away from closing, but chairman Ronald Winston already has some major plans.
“In order for this business to grow, we can’t do it with six stores,” Winston said Monday in an interview. “I think we could have between 40 and 50 stores.”
As reported, the luxury jewelry house has entered into a nonbinding agreement with the Toronto-based diamond mining company, terms of which were not disclosed.
Winston is also seeking a new president who could help with the expansion, and according to sources, the company has its eye on Thomas O’Neill, worldwide president of Burberry. He would replace Patricia Hambrecht, who is leaving the company at the end of December, when her contract expires.
“I can’t confirm or deny that announcement,” Winston said. “Our focus now is on getting the deal done with Aber.”
O’Neill was said to be traveling Monday and could not be reached for comment. He would be a logical choice for the position, since he formerly headed the jewelry division for LVMH Moët Hennessy Louis Vuitton prior to joining Burberry in 2001.
Regardless of who is named as the new president, Winston said he will remain at the jewelry firm his father founded in 1932. In a memo sent to company employees on Monday, he said, “Whether or not the Aber transaction proceeds, I will continue as chairman of the Harry Winston Group.”
The letter seeks to reassure employees that Aber will focus on company plans already in place.
In the letter, Winston said, “Aber endorses the strategic growth plan that we have developed and will help us accelerate its implementation. Our goal is to continue building Harry Winston’s unique and extraordinary global reputation, as well as expanding lines of merchandise to appeal to a wider segment of the luxury market. We will continue to invest in our salons, updating and enhancing their appearance, and evaluate real estate at attractive new sites in the U.S., Europe and Asia.”
Winston also disclosed to WWD that the firm plans to open two shops in the next year: one in Taiwan and one in Las Vegas, although arrangements for the Vegas store are still being finalized.“One of the most difficult things is finding the right shops in the best locations,” Winston said.
The firm now has six stores: in New York, Beverly Hills, Paris, Geneva, Osaka and Tokyo.
The changes come at a time when the firm has been seeking to maintain its dominance in an increasingly competitive arena for high-end jewelry. De Beers LV and Graff, both of which focus on high-end diamonds, are rolling out new stores, while Tiffany & Co. continues to expand worldwide. Many designer brands such as Gucci and Louis Vuitton have also been stepping up their offerings of fine jewelry.
Winston acknowledged that sales in New York have not been strong lately, but said the company has had substantial growth in the Far East.
While Harry Winston, which has estimated sales of $100 million, has traditionally bypassed lesser materials and focused on diamonds, gold and platinum,in recent years the company has increased its use of semiprecious stones and has also stepped up its watch offerings, which are sold in about 100 doors.
The potential acquisition comes three years after a majority stake in Harry Winston was purchased by investment firm Fenway Partners, following years of dispute between Ronald and his brother Bruce, who is no longer involved in the business.
Harry Winston currently doesn’t do any direct diamond buying from Aber, Winston noted. Tiffany & Co. owns 14.7 percent of Aber and also has an agreement to buy at least $50 million in diamonds mined from the Diavik mine in Canada, which is partly owned by Aber.
Mark Aaron, head of investor relations for Tiffany, said Monday that his firm doesn’t see any changes ahead in its dealings with Aber.
“The terms of our agreement remain the same, including our diamond supply agreement, which gives Tiffany first claim on Tiffany-quality diamonds,” Aaron said.
When asked about his thoughts on that agreement, Winston said he wasn’t aware of the specifics of the arrangements with Tiffany and that he didn’t think it would have an impact on the acquisition. Tiffany was one of the first jewelry retailers to gain control over some of its supply when it entered into the agreement with Aber four years ago. Since that time, there has been more integration between jewelers and mining firms, including the entrance of De Beers Group into retailing through a partnership with LVMH.Winston said many details are still being worked out, but he expects Aber will sell its diamonds through Harry Winston stores as it helps the company expand its merchandise offerings and open more stores.
“All the elements for a productive marriage are in place,” Winston added.
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