Both sides of Harry Winston Diamond Corp.’s business — its 18 high-end stores and its mining operations — lost a good deal of their sparkle in the first quarter as luxury spending continued to dwindle.
However, the company said deterioration in business conditions had been reversed since the start of the second quarter.
Operating losses at the Harry Winston chain more than doubled to $5 million from $2.4 million a year earlier, as sales fell 30.4 percent to $52 million.
Like many other retailers, Harry Winston has cut staff, closely monitored its inventories and reduced capital expenditures in hopes of keeping expenses in line with lower demand. The tony retailer slashed selling, general and administrative expenses by $5.8 million to $30.2 million for the quarter.
Including the firm’s mining operations, which produced 700,000 carats worth of rough diamonds in the quarter ended April 30, the net loss tallied $45.1 million, or 68 cents a share, compared with year-ago earnings of $21.3 million, or 35 cents. Sales fell 29.8 percent to $109.6 million. With sales down and the cost of sales up nearly $11 million, gross margin declined to 23.4 percent of sales from 53.1 percent in the comparable period of fiscal 2009.
But chairman and chief executive officer Robert Gannicott said business had taken a turn for the better.
“We began this quarter with a rough diamond market that could see no bottom and retail sales effectively stalled,” Gannicott said. “We ended the quarter with consistent improvement in rough diamond prices and the return of customers to our retail stores. This improvement has continued through May in both of our business segments.”