China’s diamond consumption market continues to struggle as the renowned diamond ring brand DR (Darry Ring) parent company De Beers recently reported a 90% plunge in net profit for the year 2023 and closed 184 stores. Due to the ongoing market decline in the first quarter of this year, the company continues to shutter stores.
According to reports from China News Service and Jiemian News, De Beers Group Limited (referred to as “De Beers”) released its financial performance for 2023 and the first quarter of 2024. In 2023, the company achieved operating income of 2.18 billion yuan, a 40.78% year-on-year decrease; the net profit attributable to shareholders of the listed company was 69 million yuan, a 90.54% year-on-year decrease; and the non-GAAP net profit was a loss of 120 million yuan, compared to a profit of 613 million yuan in the same period last year.
Regarding the revenue decline, De Beers stated in its annual report that the intense competition in the Chinese jewelry market, coupled with the insufficient demand for diamond-studded jewelry as optional consumer goods, and the significant increase in demand for gold as a hedge, have affected the diamond market. According to statistics from the China Gem and Jewelry Industry Association, the Chinese diamond product market shrank by about 27% in 2023. Operating income of De Beers dropped by 40.78% due to the company’s wholly-owned sales model focusing on diamond-studded jewelry, aligning with the overall trend in the diamond market.
De Beers revealed that during the reporting period, the company proactively adjusted its channel strategy, closing 184 stores. This closure included 9 stores in the first quarter, 18 in the second quarter, 86 in the third quarter, and 71 in the fourth quarter.
In 2023, De Beers’ sales of engagement rings amounted to 1.699 billion yuan, a 41.46% decrease year-on-year, accounting for 77.93% of its total operating income; while sales of wedding rings reached 449 million yuan, down 37.03% year-on-year, representing 20.61% of the operating income.
As of 2024, the outlook for De Beers’ performance remains bleak. The company’s first-quarter report for 2024 shows that its operating income was 426 million yuan, down 39.52% year-on-year, with a net profit attributable to the parent company of 29.46 million yuan, a 70.81% decrease year-on-year.
In the first three months of 2024, De Beers closed 37 stores without opening any new ones.
Public records show that De Beers Group Limited was founded in 2010 and is headquartered in Shenzhen. The company’s advertising slogan is: “A man can only customize one DR in his lifetime.” Almost all of De Beers’ revenue is concentrated on engagement rings and wedding rings, targeting the marriage and relationship-oriented consumer group.
In 2022, China’s subdued consumer environment, continued decline in carat diamond prices, and decreasing societal willingness to marry have impacted the industry. During this period, the first to face financial difficulties was the competition of the DR brand, I Do, another diamond ring brand primarily focused on the marriage market, and its parent company, Sang Li.
According to previous reports by Economic Observer, the former leading wedding ring enterprise, Sang Li, closed 205 sales outlets in 2022, with the company’s total market value shrinking by over 97%. This diamond giant, which owns the “I Do” brand, faced bankruptcy restructuring last year due to debt issues.