RAPAPORT... Harry Winston reported that third-quarter sales for the period that ended on October 31, fell 15 percent year on year to $119.7 million. Mining segment sales dropped by 40 percent to $36.2 million, however, luxury segment sales rose 3.8 percent to $83.5 million. Harry Winston reported a net loss of $4.7 million, down from a profit of $12.7 million one year ago.
Rough diamond prices dropped from their highs of the second quarter, primarily due to the ongoing European sovereign debt crisis, according to Harry Winston. In addition, a build-up of rough diamond inventories prior to the traditionally quiet religious holiday period in India and Israel enabled buyers to exert downward pressure on polished diamond prices. However, the retail diamond market continued to be resilient, leading to an improvement in both the rough and polished diamond markets at the beginning of the fourth quarter.
The luxury jewelry and timepiece market experienced moderate growth during the third quarter as demand from emerging markets remained strong, offsetting the effects of economic uncertainty in Europe and the U.S. With the trend of rapidly rising wealth and increased mobility of Asian clients, these customers represent a growing share of clientele in all sales regions, according to the company. New wealthy Chinese consumers continue to be attracted to established luxury brands that have a reputation for providing the highest levels of quality and service.
Working capital as of October 31, was $83.2 million compared with $108.7 million on January 31. The company had 1.1 million carats of rough diamond inventory available for sale at an estimated current market value of $123 million.