JTA / March 16, 2005
By Larry Luxner
RIO DE JANEIRO — In 1939, on the eve of World War II, a penniless German Jew named Hans Stern arrived in Brazil with his parents, 10 deutschmarks in his pocket — and no clue as to how he'd make a living. Six years later, as the war was winding down, the enterprising teenager sold his prized accordion for the equivalent of $200 and used the money to start his own jewelry business.
Today, H. Stern Jewelers is Latin America's — and Israel's — leading retailer of precious stones, with 160 stores in luxury hotels, shopping malls and airports around the world. Half of those outlets are located in Brazil. Another 30 are in Israel, and the rest are spread throughout Europe, the United States and Spanish-speaking Latin America.
Hardly a five-star property opens in some Latin capital, it seems, without the obligatory H. Stern outlet and its glittering display of watches, necklaces, rings and bracelets in the hotel lobby.
It's been a long road from the German town of Essen, where Stern was born and raised, to Ipanema, the glittering, upscale Rio de Janeiro suburb where Stern's showroom is visited by over 120,000 tourists a year.
"After Krystallnacht in 1938, my father decided to leave Germany as quickly as possible," said Stern, now 82. "But it was difficult to get visas. I had an uncle living in Brazil who had come here in 1935. He was married to the sister of Roberto Burle Marx, the architect, and they got us visas. I came to Brazil with my parents and grandfather.
"During the war, I had to work. We came here with nothing, so I got a job as a typist in a company exporting and cutting gems. This is how I learned the business," recalled Stern, who speaks Portuguese, English, Spanish, French and a little Yiddish in addition to German.
"First I worked as a broker, going to the hinterlands, getting stones on consignment. I ended up making some jewelry for friends, then customers," he said.
The young jeweler's big break came in 1951, when he received an order from Nicaraguan dictator Anastasio Somoza for a $20,000 aquamarine necklace. In 1955, Stern opened his first non-Brazilian outlet in the Uruguayan capital of Montevideo.
Business boomed, and H. Stern began expanding to other South American countries, and eventually Europe, Israel and the United States. Along the way, the Rio-based company has introduced efficient and permanent research for raw materials, utilizing items of various origins and a variety of precious gemstones ranging from aquamarines and amethysts to tourmaline, topaz and tanzanite.
"I believe that Brazil, being so rich in gems, should be as known to the world for gemstones as France is for perfumes, as Scotland is for whiskey," says Stern. "In Brazil alone, we are now in 18 cities. We have already become better known than any other jewelry company in Brazil."
Stern never discusses revenues, though Forbes estimates annual sales at between $300 million and $500 million. The Wall Street Journal was more conservative, putting sales at around $150 million. Asked about the discrepancy, Stern simply said "people like to throw numbers around."
At the moment, H. Stern's domestic operations employs 3,500 people, 2,800 of them in Brazil. Another 700 employees work at H. Stern's overseas operations, which include outlets in Argentina, Colombia, Peru and the U.S. Virgin Islands. In New York alone, H. Stern has four stores — one at Fifth Avenue at 51st Street, one at the Waldorf-Astoria and another two at JFK International Airport.
In Europe, H. Stern runs its own stores in Paris, Munich and Frankfurt. Franchisees for H. Stern operate in Greece, Portugal and now Kazakhstan. Negotiations are underway to launch a joint venture in Cannes.
H. Stern's most important overseas operation, however, is in Israel, where the jewelry retailer employs 300 people in 30 stores from Haifa in the north to Eilat in the south.
"If you visit Israel now, you cannot ignore us," said Israel Kurt, manager of H. Stern's operations in Israel, noting that the company opened its first duty-free shops there in 1964, with outlets at the Tel Aviv Hilton and Ben-Gurion Internatonal Airport. "We used to depend only on tourism. Now we have tourism and local business, and we live from the local business now and are waiting for the tourists to come."
H. Stern's largest shop in Israel is a 150-sq-meter outlet at the Ramat Aviv Mall, just north of Tel Aviv. The chain also runs six sales points in the new terminal at Ben-Gurion Airport.
"We are contributing to the development of the jewelry industry in Israel, especially in design and gemology, by giving a helping hand to the Shenkar College in Tel Aviv," he said.
Besides his 30 stores in Israel, H. Stern also has two franchises in the United Arab Emirates, operating under the Azal name. More franchises may open in other Arab countries including Lebanon.
"We are a Brazilian company. Of course they know we're Jewish and that we're big in Israel, but they don't care. Business is business," said Kurt, noting that Palestinian negotiator Nabil Shaath recently bought a wedding ring from H. Stern, and that "Hanan Ashrawi is one of our best customers."
Stern isn't particularly observant, though he's been a member of ARI, a liberal Ashkenazi congregation, ever since its founding shortly after his arrival in Rio de Janeiro. Intermarriage is relatively high among Rio's Jewish community, he says, though "there are also a lot of conversions. My youngest son married a Brazilian girl who converted to Judaism on her own."
A likeable grandfather who enjoys collecting stamps, swimming, playing his Hammond organ and listening to Bach, Stern also takes special pride in showing friends around his Ipanema cutting and polishing factory, as well as the H. Stern Cultural Center, which is almost an obligatory ritual on the itinerary of every tourist who comes to Rio.
In fact, some 10,000 visitors drop by the 17-story headquarters every month, many of them on hotel-organized bus tours. The total area in two buildings comes to 14,000 square meters, of which 5,700 square meters are occupied by workshops for cutting and goldsmith work, creation of jewelry, quality control, administration and a complete gemological laboratory — the only one in Brazil belonging to a private company — where tests are carried out to identify and classify gems.
On the third floor of the Ipanema headquarters, visitors may take a 40-step gemological tour, watching through a series of windows while while wearing headphones switched to one of 18 languages including Japanese, Korean, Turkish, Hebrew and Arabic. The 12-minute narrative tour — accompanied by "The Girl from Ipanema" playing softly in the background — shows visitors how a jewel is made, beginning with cutting the rough stone, designing, goldsmith work, selection and polishing a gem.
Of course, the big thrill for tourists is actually buying something, and since most of the gems are mined locally, prices are often 30% less than what they'd be back home. Those who end up making purchases at H. Stern spend an average of $1,200.
Even so, tourists represent only 20% of H. Stern's total sales. The remaining 80% comes from the local Brazilian market, which Stern says has grown tremendously in recent years, thanks to a decision by the company to pay closer attention to global fashion trends.
Stern, who personally doesn't wear any jewelry except his watch and occasionally cuff links, still works five days a week, from 8:30 a.m. to 7 p.m., and half a day on Saturdays.
"Being semi-retired means coming into the office half an hour late," he jokes. "I'm on the road two or three months a year, visiting our stores. Until a few years ago, three of my four top executives were of European Jewish descent. Over time, they've been replaced by local executives. Now, of the old people, I'm the only one left."
Day-to-day operations are now being headed by Stern's 45-year-old son Roberto, along with help from Roberto's brother, Ronaldo, who is based in New York. Stern's wife, Ruth, to whom he's been married for 47 years, helps out whenever possible. But Stern remains firmly in charge of the company.
And while there's been some talk of taking H. Stern public in order to raise capital, the old man says outsiders will never control more than 49% of his company. "The family won't let go," he insists, "not as long as I'm around."