Harry Winston Retail Sales Double in Q2

(IDEX Online News) – While prices of Harry Winston's rough diamond increased by 41 percent in the second quarter, it is its retail segment that is catching attention. Sales by the firm's jewelry and timepiece businesses jumped 98 percent year-over-year, Harry Winston reported Wednesday.

Harry Winston's luxury brand segment sales were $132.8 million. Seeing through the effect of $55.6 million of very large transactions at a reduced margin, solid growth in both sales and margin were delivered by the jewelry and timepiece businesses, the company explained.

This segment generated operating profit of $6.8 million and EBITDA of $10.1 million during the second quarter.

Diamond production of 0.72 million carats were an increase of 11 percent over the prior year. This is Harry Winston's 40 percent share of production at the Diavik mine. Due to a sale date straddling the quarter end, 0.57 million carats were sold in this quarter versus 0.78 million carats sold in the second quarter of the prior year.  

The carats sold were smaller than the prior year due to extra small diamonds from the processing of earlier plant rejects and lower quality ore from the upper section of the A-418 pipe.

Despite these cumulative negative variances, the market price increase of 41 percent led to an increase of 3 percent in sales to $89.6 million.

The mining segment's operating profit fell 41 percent to $16.3 million.  

“Global retail demand, especially in the emerging economies such as China and India, has delivered both strong retail sales growth and strong rough diamond prices," said Chairman and Chief Executive Officer Robert Gannicott.

Gannicott expects continued strong global jewelry and timepiece demand from China while Japan and the Middle East improve and the U.S. remains subdued. Despite this outlook, he does not predict further near-term rough diamond price increases.