Gitanjali to cut stores in rural US

After betting highly on the US market in the pre-recession era, Gitanjali Gems, an integrated diamond

jewelry manufacturer and retailer, now plans to cut its presence in the US rural retail locations. The company is planning to cut store size from these locations, by reducing the quantity of display items. A couple of non-performing stores are also likely to be closed. At the same time, it also proposes to expand presence at premium locations.

The US is the world’s largest consumer market for gold and diamond jewelry. It accounts for 40 per cent of global jewelry consumption. Gitanjali owns 130 retail stores in the US, which contribute 13-15 per cent of its annual turnover. However, this year the jewelry maker is expecting a loss of $15 million from US operations, due to lower sales in rural retail points. Mehul Choksi, MD informs that, around 18-20 rural retail stores are currently underperforming. This year US sales are estimated at $130 million.

Earlier in 2007, when Gitanjali acquired a 97 per cent stake in Samuels Jewelers Inc, a Texas-based jewelry retain chain with 97 stores in the US and a turnover of $100 million, the retail chain had evinced interest in increasing US operations through continuous expansion. The company had acquired another US retail jewelry chain, Rogers, for $18.5 million to boost retail presence. However, US jewelry demand, which had fallen drastically between September 2008 and June 2009, started suddenly recovering in July 2009.

Interestingly, Gitanjali is also planning to add at least three new jewelry stores every month in the US for the next few months to expand visibility in premium locations.