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Harry Winston Net Rises

Global strength offsets softness in U.S., Japan

Buoyed by strong international sales, Harry Winston Diamond Corp. more than doubled its second-quarter profits Tuesday and solidly beat analysts’ estimates.

This story first appeared in the September 10, 2008 issue of WWD.  Subscribe Today.

The Toronto-based retailer and supplier of diamonds reported a 149 percent leap in profits, posting net earnings of $49.9 million, or 81 cents a diluted share, for the quarter ended July 31, versus net income of $20.1 million, or 33 cents a diluted share, for the year-ago period. Analysts anticipated 43 cents a share.

Sales grew 7.4 percent to $186.1 million from $173.3 million last year with retail sales up 18.9 percent to $81.1 million. The company’s cost of sales was $73.5 million for a gross margin of 60.5 percent, compared with $81.8 million, and a gross margin of 52.8 percent, for the comparable quarter in 2007.

The firm said retail sales in luxury jewelry were “robust,” and, with a global footprint, are “well positioned to withstand regional economic disruptions” in the U.S. and Japan. Harry Winston said the sales performance in the first half has left it positioned to achieve its annual sales growth objective in excess of 15 percent.

“Our businesses in Asia, Europe and the Middle East have been sufficient to offset the general market softness in the U.S. and Japan,” said president Thomas O’Neill. “This contributed to our strong retail finish for the second quarter. Together with solid results from the first quarter, the first half of the year has put us on firm footing into the second half of the year.”

For the first half, profit ballooned 205.4 percent to $71.2 million, or $1.17 per share, compared with $23.3 million, or 39 cents a diluted share. Revenue was up 8.8 percent to $342.2 million, from $314.6 million.