Gross margin (gross profit as a percentage of net sales) increased to 57.8% in the second quarter, from 55.1% last year, partly reflecting the recapture of higher product costs through retail price increases, as well as manufacturing efficiencies and a decline in wholesale sales of rough diamonds. Gross margin was 57.8% in the first half, compared with 55.5% last year.
Wow. This does not even include the fact that the diamond market itself is one big cartel controlled by De Beers, the Russians and a couple of other players. There was an article in the NYTimes about the fall in diamond prices in '09 as demand collapsed. One of advisors to a diamond producer said the following :
How the buy-in price for the stones will be set, and how the company will determine when the price goes up and down, is unclear, Mr. Malinin said.
"We have to tell people that diamonds are valuable," he said. "We are trying to maintain the price, just as De Beers did, as all diamond producing countries do. But what we are doing is selling an illusion," meaning a product with no utility and a price that depends on the continued sense of scarcity where there is none.
Just like gold. The whole jewelry industry is one big marketing trick. I do not understand the human obsession from ancient times with 'precious' stones and gold.
