De Beers estimates that retail diamond jewelry sales are down 2% to 3% for the first six months of the year.

De Beers managing director Gary Ralfe said he had expected the drop to be higher, given the gloom in the market. He noted that imports into the U.S. are down 20%, mostly because most American jewelers are still heavily stocked as the result of a lackluster Christmas 2000.

The disappointing figures have led De Beers to trim its announced sales target for the year in response to the economic slowdown.

The fact that De Beers is retreating from its sales target—something the company never had until a year ago—is a setback for the “new De Beers,” indicating the company is returning to its traditional policy of managing supply to prop up prices. (See “The New De Beers Meets an Old Dilemma,” JCK, July 2001, p. 102.) But analysts think the company had to make the move to preserve confidence in the market