Harry Winston Consolidated Sales Up 7%

Retail Sales Increased 19% and mining up 27% for the period

By JCK Online Staff -- JCK Online, 9/10/2008 3:47:00 PM

Harry Winston Diamond Corp. reported an increase in consolidated sales for the second quarter of 7 percent, generating a 23 percent increase in gross margin and a 30 percent increase in consolidated earnings from operations compared to the results of the second quarter of the prior year.

Consolidated quarterly sales totaled $186.1 million with earnings from operations of $73.4 million, compared to $173.3 million and $56.2 million, respectively, for the comparable quarter of the prior year.

For the period ended July 31, net earnings were $49.9 million, compared to net earnings of $20.1 million, respectively, in the second quarter of the prior year.

The retail segment recorded a 19 percent increase in sales to $81.1 million with earnings from operations of $5.9 million compared to earnings from operations of $3.2 million in the comparable quarter of the prior year. Retail segment SG&A as a percentage of sales decreased to 42 percent in the second quarter from 43 percent in the comparable quarter of the prior year.

Earnings from operations for the mining segment increased 27 percent to $67.5 million, year-over-year. Rough diamond production for the second calendar quarter was down 23 percent to 1 million cts., year-over-year. Mining sales of $105. million remained at a consistent level with the prior year as higher diamond prices compensated for reduced volume.

"The international cachet of the Harry Winston brand has proven its strength despite difficult trading conditions in both the US and Japanese markets,” said Robert A. Gannicott, Harry Winstons chairman and chief executive officer. “This expanded market place has also delivered strong pricing for our rough diamond sales in the face of lower than anticipated production from the Diavik Mine as we work through the transition from one open pit to the next and the uncertainty in production forecasting that this entails. The construction program to develop the underground portions of the ore bodies that add lifetime and operational security to the project is well advanced and comfortably within schedule and cost budgets.”

Thomas J. O'Neill, president of Harry Winston added, "Our businesses in Asia, Europe, and the Middle East have been sufficient to offset the general market softness in the U.S. and Japan; this contributed to our strong retail finish for second quarter. Together with solid results from the first quarter, the first half of the year has put us on firm footing into the second half of the year."