Solid second quarter for Harry Winston

Vancouver – Harry Winston Diamond (HW-T) earned US$16.5 million in the second quarter of the year, a vast improvement over its US$24.5-million loss in the same quarter last year and a strong indication that the diamond market is back on its feet.

The diamond miner and retailer reported sales of US$153.7 million, a 62% increase over its second quarter sales in 2009 of US$94.8 million. Rough diamond sales were up 89% compared to the same quarter last year and brought in US$86.8 million. Harry Winston says the increase in sales stemmed from a significant increase in rough diamond prices – they have risen 62% – and a slight increase in the volume of carats sold, which went up 17%.

Retail sales were also up, gaining 37% compared to the April-to-June period in 2009 to total US$66.9 million. Europe and Asia led the retail sales increase, with both markets showing a 40% improvement. Sales in the United States increased 31%.

Harry Winston also owns a 40% stake in the Diavik diamond mine in the Northwest Territories, where production was reduced last year in response to failing diamond prices. The production curtailment is now over and in the second quarter Diavik produced 650,000 carats.

“This quarter has demonstrated the continued recovery in the international diamond business and it has also shown improvements from our own business segments,” said Harry Winston’s chairman and CEO Robert Gannicott. “Both mine production and rough diamond sales increased in parallel with the growth in retail sales from our network of international stores, especially at the high end.”

In a conference call, company president Frederic de Nap credited the diamond industry’s retail growth to the Middle East and China, saying global economic volatility has made high-worth jewelry a good investment.

Before the end of the year Harry Winston will hold five more rough diamond sales, two in the third quarter and three in the fourth.

Investors were pleased with Harry Winston’s second quarter numbers and added $2.10 to the company’s share price to bring it to $12.85. The company has a 52-week trading range of $6.18 to $14.95 and has 84 million shares outstanding.