RAPAPORT...Harry Winston Diamond Corporation moved into the red in the third quarter of fiscal 2008, as the weaker dollar brought earnings down. The Toronto-based diamond miner and retailer reported a net loss of $7.4 million, or 13 cents per share, for the three months ended October 31, 2007, compared with profits of $18.8 million one year ago.
The company reported that without the impact of a $40.6 million foreign exchange loss between Canada and the United States, net earnings would have been $33.2 million for the period. Canada’s dollar appreciated by 13 percent against the greenback.
Harry Winston, formerly Aber Diamond Corp., also reported that the foreign currency loss resulted mainly from a revaluation of future income taxes.
The company’s sales grew 21.5 percent to $176.5 million, which drove operating earnings up 79 percent to $66.3 million. Mining revenues increased 35 percent to $122.7 million in the third quarter, spurring three rough diamond sales in Israel, Belgium and India.
Production at Diavik, in which Harry Winston holds a 40 percent stake in partnership with Rio Tinto, rose 10.3 percent to 1.249 million carats during the three months ended September 30. The mine produced 9 million carats in the first nine months of calendar year 2007, up 23 percent from the previous year, and is expected to reach 11 million carats by year’s end.
Robert Gannicott, chairman and chief executive officer (CEO), stated that given heightened production at the Diavik mine, Harry Winston was poised to take advantage of rising global demand in the context of shrinking global supply.
Sales at Harry Winston’s retail segment, however, fell 1.3 percent to $53.8 million for the quarter, as international sales increased 16 percent to $34.4 million, and sales in the United States fell 22 percent to $24.9 million due to volatility in the U.S. financial markets, according to company spokespersons.
For the fiscal year-to-date, Harry Winston’s net income plunged 79 percent to $16 million, or 27 cents per share, and sales grew 21.4 percent to $491.1 million.
Neiman Marcus Profits Triple in 1Q08Luxury retailer Neiman Marcus reported that profits nearly tripled to $78.7 million in the first quarter of fiscal year 2008. Profits were boosted by an 8 percent rise in revenues to $1.13 billion for the three months ended October 27, 2007, and a 6.5 percent growth in comparable store sales. Operating earnings increased 23 percent to $189.7 million.
Revenues were comprised of sales from Neiman Marcus’ specialty stores, which grew 9.3 percent to $961.6 million, and its direct marketing sales, which saw a 7.1 percent increase to $170.6 million.
The company posted other income of $32.5 million from a one-time pension reduction gain, and income of $4.2 million from its investment in an internet retailer.
In a separate December 5, 2007, statement, Neiman Marcus reported that November revenues grew 8.7 percent to $360 million, while comparable revenues increased 5.8 percent to $351 million. Designer shoes and handbags, women’s fine apparel and men’s wear were the strongest merchandise categories at its specialty retail stores.
Whitehall Jewellers Sales Up
Whitehall Jewellers reported a $4.3 million drop in sales to $44.5 million during the third quarter of 2007. Same-store sales for the period ended November 3, 2007, fell $3.3 million. Spokespersons claimed that the company had narrowed its quarterly loss 23 percent to $16.4 million. For the nine months ended November 3, net sales fell 4 percent to $157.6 million, same-store sales were down 4 percent, and net loss stood at $49.5 million, up from $46.8 million one year earlier.
Japan’s Retail Sales RiseRetail sales across Japan rose 0.9 percent to $6.2 billion (JPY 692.5 billion) in November, the first increase in three months, according to the Japan Department Stores Association.
The jewelry sales category, which also included artwork and precious metals, fell 5.1 percent to $296 million (JPY 33.25 billion). Retail sales across Tokyo rose 1.7 percent from last November to $1.5 billion (JPY 174.54 billion).
Hong Kong Jewelry Sales Up
Jewelry and watch sales in Hong Kong rose 27.4 percent during October, according to government statistics. The increase for this category was 10 percent stronger than total retail, which was up 17 percent to $2.69 billion (HKD 21 billion). Hong Kong also revised its September retail sales growth higher to 16 percent.
An official government statement attributed the growth to an upbeat consumer environment based on “robust economic fundamentals” and a strengthening labor market. Additional contributing factors were a heavy influx of visitors and a stock market boom.
Electronic sales rose 33 percent and motor vehicle sales were up 29 percent. For January through October, retail sales rose 12 percent from the same period in 2006. Expectations are that 2007 retail sales will clock in between 15 percent and 20 percent higher than 2006. Tourism continues to boost the retail sector, with more than half of visitors coming from mainland China during October.
Online Retailers Cash in on Green Monday
Online retailers in the United States recorded their best day in history on Monday, December 10, selling $881 million worth of merchandise. Research company comScore reported that online sales on the second Monday of December, known as “Green Monday,” rose 33 percent from Green Monday 2006.
While the “Cyber Monday” following Thanksgiving symbolically kicks off the online holiday shopping season, most retailers consider the second Monday of December the beginning of the peak period, given that orders placed thereafter may not arrive before Christmas. comScore reported that online sales grew 19 percent to $20.49 billion in the first 41 days of the holiday season – November 1 to December 11.
Gian Fulgoni, comScore’s chairman, stated that online spending is following the pattern it established last year. He described this pattern as a growth rate that accelerates as the season moves along. In Fulgoni’s view, consumers are responding positively to retailers’ promotions and discounts, and spending is on track to meet comScore’s forecast of $29.5 billion for the season.
Three individual days recorded online sales of more than $800 million: Green Monday;Tuesday, December 11, with $819 million; and Thursday, December 6, with $803 million. Online U.S. spending for January through October rose 21 percent to $93.6 billion.
comScore Inc. updated its online retail sales figures for the period November 1 through December 18, 2007. Nearly $25 billion has been spent online in the United States, a 19 percent increase from the same 48-day period in 2006. The total surpasses the total spending for the 2006 Christmas season, according to comScore.
The most recent two days of sales reporting, Monday, December 17 – up 33 percent to $700 million – and Tuesday, December 18 — up 25 percent to $670 million – both showed strong growth versus last year.
Amazon Reports Best Holiday Sales EverAmazon.com had the best holiday season in its 13-year history this year, selling more than 5.4 million items between November 15 and Christmas Day. The online retailer counted 62.5 items sold per second through the period, with December 10 being its busiest day when it sold 3.9 million units. Amazon said it shipped more than 99 percent of orders in time to meet holiday deadlines worldwide.
Article from the Rapaport Magazine - January 2008. To subscribe click here.