Harry Winston Diamond Corp. and its retail unit swung to second-quarter losses, as the company was dragged down by unfavorable currency fluctuation and plummeting demand that cut corporate sales nearly in half.
Chairman and chief executive officer Robert Gannicott said sales were affected by softness in retail, as well as weak prices and volume in its rough diamond business.
However, he said during the quarter, he saw rough diamond prices “increase substantially” as retail sales “edged up month to month…suggesting a shift in momentum.”
In the three months ended July 31, the Toronto-based firm’s retail unit registered an operating loss of$5.6 million versus an operating profit of $5.9 million a year earlier. Sales fell 39.8 percent to $48.8 million, from $81.1 million last year. In the U.S., revenue decreased 48 percent to $15 million, while European sales fell 44 percent to $17.7 million and in Asia, sales receded 21 percent to $16.1 million.
The company pegged the decline in sales on the embattled luxury market, adding its lower-priced items were holding up slightly better.
“The upper end of the market is slow and certainly this is what is dragging down the retail part of the business,” said president Thomas O’Neill. “When that will turn around I think has much to do with the macroeconomic situation.”
Overall, the company reported a net loss of $24.5 million, or 32 cents a diluted share, versus net income of $49.9 million, or 81 cents a share, in the year-ago period. Revenue contracted 49.1 percent to $94.8 million, from $186.1 million in 2008.
Gross margin as a percentage of sales slid to 30.1 percent versus 60.5 percent for the prior-year quarter. The company said it recorded a foreign currency exchange loss of $25.3 million, compared with a $5.3 million gain in 2008. Selling, general and administrative expenses were cut 17.4 percent, or $6.8 million.
For the first half, Harry Winston had a $69.6 million loss, or 97 cents a diluted share, versus profit of $71.2 million, or $1.17 a share, a year earlier. Revenue fell 40.3 percent to $204.4 million, from $342.2 million. In retail, the firm swung to a $10.6 million operating loss, versus an operating profit of $3.5 million. Net sales for the period declined 35.3 percent to $100.8 million, from $155.8 million.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast