A pullback in luxury spending collided with an impairment charge and damaging foreign currency fluctuation to throw Birks & Mayors Inc. for a third-quarter loss.

This story first appeared in the March 3, 2009 issue of WWD. Subscribe Today.

For the three months ended Dec. 27, the Montreal-based jeweler posted a net loss of $42.7 million, or $3.76 a diluted share, compared with net income of $12.7 million, or $1.09 a share, in the year-ago quarter. Excluding the impact of a goodwill impairment charge and deferred tax asset valuation allowance, net income slipped 77.7 percent to $2.8 million, or 25 cents a share. Revenue slid 28.2 percent to $88.1 million from $122.6 million, and comparable-store sales decreased 23 percent.

Quarterly gross margin fell to 42.6 percent of sales from 48.5 in the prior-year period. The retailer said the 590 basis point decline was in large part due to the company’s decision in November 2007 to lower the retail prices of certain products sold in Canada to reduce price disparity with the U.S. market.

“The entire luxury retail sector was dramatically affected by the abrupt and severe nature of the economic downturn, banking crisis and unprecedented drop in consumer confidence during the quarter,” president and chief executive officer Tom Andruskevich said. “As a result, our company experienced significant decreases in store traffic, average sale, net sales and operating profits.”

In the nine months, the net loss came to $46.6 million, or $4.11 a share, versus net income of $7.2 million, or 61 cents a share, last year. Stripping out the impact of special items recognized during the third quarter, the net loss was $1.1 million, or 10 cents share. Revenue fell 11.5 percent to $221.7 million from $250.5 million, and comps fell 14 percent.

The company operates 69 jewelry stores in the U.S. and Canada.