Strong demand for diamonds in China and other emerging markets helped Harry Winston Diamond Corp. swing to a fourth-quarter profit on a better than 60 percent sales gain.
For the period ended Jan. 31, the company earned net income of $9.9 million, or 12 cents a diluted share, versus a net loss of $1.5 million, or 4 cents a share, a year earlier. This included a foreign exchange loss related to future income tax liabilities of 4 cents a share, the Toronto-based firm said.
Net sales expanded 61.1 percent to $215.4 million from $133.7 million a year ago. Gross margin for the quarter improved to 34 percent of sales, from 28 percent, in the year-ago quarter.
Analysts were expecting earnings per share of 4 cents on sales of $142.3 million, Yahoo said.
Quarterly retail sales increased 89.1 percent to $132.7 million compared with $70.2 million a year earlier with sales in Asia up 138 percent to $64 million, sales in the U.S. up 79 percent to $47.1 million and sales in Europe up 27 percent to $21.6 million.
“New customers in emerging markets, especially Asia, have replaced demand from the traditional markets such as America during the financial crisis,” said chairman and chief executive officer Robert Gannicott. “As recovery in America and development in the BRIC [Brazil, Russia, India and China] economies continues, the outlook for rough diamond prices, led by jewelry sales, is expected to be robust.”
The ceo assured analysts and investors that all of its employees in Japan were unharmed, and that the impact of the crisis is “yet to be measured.”
Last year, Japan accounted for 11 percent of global diamond jewelry consumer demand and 18 percent of Harry Winston’s own luxury brand sales, he noted.
Gross margins for the retail segment tightened to 40 percent of sales from 44.1 percent a year ago as the mix of sales skewed towards high-value transactions which provide thinner margins.
In 2010, Harry Winston turned a $26.6 million profit, or 27 cents a diluted share, compared with a net loss of $77 million, or 99 cents a share, in the prior-year period.
Annual sales jumped 51.1 percent to $624 million, from $412.9 million, the previous year. At retail, sales improved 53.2 percent to $344.8 million, from $225 million in 2009.
Harry Winston operates 19 jewelry salons, including eight in the U.S., five in Japan and four elsewhere in Asia.
Results were reported Tuesday evening. On Wednesday, shares closed at $14.92, up 70 cents, or 4.9 percent, in New York Stock Exchange trading.