Harry Winston’s 4Q Sales Flat on Weak Retail

Harry Winston reported that consolidated sales were flat at $216 million in the fourth ‎fiscal quarter that ended on January 31, 2012 as its retail performance slumped during ‎the period, which included Christmas. Group profits grew 21 percent to $16.6 million.‎

Harry Winston StoreHigher rough prices helped boost mining revenues. The company’s mining segment, ‎which includes a 40 percent stake in the Diavik mine in Canada, saw sales increase 24 ‎percent year on year to $102.2 million. Average prices rose 9 percent year on year to ‎‎$120 per carat and firmed from price deterioration in the third quarter. The mining unit recorded operating profits of $27.4 million, a year-on-year surge of 53 percent.‎

‎“Our own rough diamond prices have now stabilized at levels approximately 20 percent ‎above the beginning of the year and resumed a steady growth in many categories,” said ‎Robert Gannicott, the chief executive officer of Harry Winston. “This is consistent with the ‎trends that we see in the luxury brand business where strong demand for watches has ‎propelled not only our own timepiece orders but also the pricing of small diamonds that ‎are used throughout the watch industry.”‎

Gannicott added that retail sales showed strength during the year in the bridal and ‎collection jewelry sections, which the company has target as vital to its expansion plans ‎in China and in established markets in the U.S. ‎

Harry Winston’s retail sales fell 15 percent to $113.8 million during the quarter. Sales in ‎North America dropped 11 percent to $41.5 million and in Asia, excluding Japan, sales ‎slumped 66 percent to $17.3 million as a significant transaction a year earlier was not ‎repeated in the current quarter. Sales in Japan rose 21 percent to $23.8 million and in ‎Europe they almost doubled to $31.2 million. The retail business had operating profits ‎increase 28 percent to $6.8 million.‎

For the full year, group sales rose 13 percent to $702 million while profits slumped 46 ‎percent to $25.5 million. Cost of sales rose 16 percent to $452 million, while expenses ‎increased 15 percent to $193.6 million.‎

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