Harry Winston Retail Sales Up 8%

By JCK Online Staff -- JCK Online, 12/11/2008 1:53:00 PM

Harry Winston Diamond Corp. reported consolidated net earnings of $71.9 million for the third quarter, ended Oct. 31, compared to a net loss of $7.4 million in the third quarter of the prior year.

Consolidated net earnings for the third quarter included a $49 million net foreign exchange gain, as a result of the weakening of the Canadian dollar relative to the U.S. dollar, compared to a $40.6 million net foreign exchange loss in the comparable quarter of the prior year, the diamond mining luxury jewelry retailer said.

Consolidated sales were $148.6 million for the third quarter compared to $176.5 million for the comparable quarter of the prior year, a 24 percent decrease in gross margin and a 35 percent decrease in consolidated earnings from operations, the Toronto-based company said.

The company’s retail segment recorded an 8 percent increase in sales to $57.9 million, with a loss from operations of $4 million compared to a loss from operations of $3.6 million in the comparable quarter of the prior year. Retail segment SG&A as a percentage of sales remained consistent with the comparable quarter of the prior year at 53 percent.

Earnings from operations for the mining segment decreased 33 percent to $47 million, year-over-year. Rough diamond production for the third calendar quarter was down 26 percent to 0.9 million carats produced versus 1.25 million for the comparable quarter of the prior year resulting from the continuing grade variation in the A-154 South pipe, and the processing of a higher volume of low grade mud-rich material from the top of the A-418 pipe.

Mining sales were down 26 percent, year-over-year to $90.7 million due to reduced production. Since September, rough diamond production has returned to normal levels with grades in both A-154 South and A-418 returning to levels consistent with the ore reserve. However, beginning in October, the rough diamond market has become subdued as the diamond distribution chain seeks to deleverage by not replenishing inventories.