Byline: Wendy Hessen / with contributions from Katherine Weisman, Paris

NEW YORK — “The rumors of our death are grossly exaggerated,” said John Kleinschmidt, president of Grosse Jewels, the costume jewelry licensee for Christian Dior Jewelry.
At the end of last month, the company vacated its North American headquarters and showroom at 417 Fifth Avenue here, setting off considerable industry speculation about the company’s future and whether the move reflected a new strategy by Dior.
“We had an opportunity to get out of an ironclad lease that had nearly four years remaining, and we took it,” said Kleinschmidt, who was reached at his home, which is also serving as his office for the moment.
“At great torture to us, the building is being rewired to attract more dot-com companies, and we really didn’t need all the space we had,” he said. “When we saw a chance to get out of our lease without paying a $250,000 penalty, we jumped at it.”
Like other accessories and garment-center buildings, 417 Fifth Avenue has become a target for technology firms looking for real estate. Earlier this year, the entire second floor of the building was occupied by Women.com. He said the shutting of the showroom is a temporary move.
For the May accessories market, Grosse will show out of a suite in the Kitano Hotel, located at 66 Park Avenue and 38th Street.
But beyond space issues, Kleinschmidt also conceded that the move reflects another issue facing the company.
As the house’s first-ever licensee in 1959, Grosse, based in Pforzheim, Germany, has enjoyed an uninterrupted history with Dior. The costume jewelry line has long been a fixture in department stores, known for classic and well-made jewelry. The line is currently sold in nearly 1,000 doors throughout North America.
In an effort to capitalize on Dior designer John Galliano’s influence on the house and the resulting renewed interest in jewelry, in late 1997 the company introduced the Runway Collection, a series of pieces closely derived from those in the Dior couture and ready-to-wear shows. The collection premiered in Bloomingdale’s and Dior boutiques and was priced considerably higher than the core line.
The Runway Collection, which is now sold in about 150 select specialty doors, retails from about $95 to $2,250, whereas the main line typically retails from about $45 to $300.
Kleinschmidt acknowledged that the main line no longer meshes with Dior’s revamped image. He said business this year was flat and, with accessories in the midst of a hot streak, the focus would likely center on how to best capture some of the same excitement that has been garnered in other categories of accessories, like handbags.
“Without question, the direction will be more reflective of Dior today. We may de-emphasize the core line or discontinue it altogether,” he said, although he stressed that such a decision would be made in Paris. “There is a possibility that we could really get behind the Runway Collection and then diffuse it. They are not opposed to diffusing the high-end look.”
Neither Sidney Toledano, president of Christian Dior Couture, nor Michael Burke, Dior Couture’s managing director, could be reached for comment Friday, the start of the long Labor Day weekend in Paris.
A spokesman for Dior said he was not aware of any planned changes for Dior’s fashion jewelry or license agreement. While the house has made efforts in recent years to control product manufacturing and distribution, it isn’t systematically averse to licensing when it comes to technical products such as eyewear, lingerie or fashion jewelry, the spokesman noted.
Though unthinkable for some companies, historically, Dior has been willing to walk away from a business even if the move would cause a dramatic drop in sales and profits.
This was clearly evident in Dior Couture’s decision to wind up its license with its Japanese partner, Kanebo, at the end of February 1998, a decision that resulted in a drop in wholesale volume of about $200 million in 1998. That year, the U.S. saw licensing volume drop roughly $30 million due to discontinued licenses for rtw, watches, children’s wear, scarves and other goods.