Harry Winston Q1 Consolidated Sales Up 26%

Harry Winston salon in Paris

Harry Winston Diamond Corp. seems to have the best of both worlds with its businesses in diamond mining sector and as a luxury jewelry and watch retailer. Both market segments have shown strong growth over the past year and this is continuing as the Toronto-based company reported Wednesday that consolidated sales increased 26 percent for the first quarter of fiscal year 2012. The increase at constant exchange rates was 22 percent.

Luxury brand sales, through its network of salons that sell luxury jewelry and watches in key cities throughout the world, increased 26 percent to $81.9 million for the quarter, ended April 30, primarily driven by stronger high jewelry sales in the United States and higher timepiece sales. The increase at constant exchange rates was 20 percent.

In addition, Harry Winston, which supplies rough diamonds to the global market from its 40 percent ownership interest in the Diavik Diamond Mine in Northwestern Canada, said mining sales increased 27 percent to $62 million, primarily due to higher rough diamond pricing versus the comparable prior year period. Rough diamond output, for the period ended March 31, dropped to 500,000 carats compared to 600,000 carats for the same period last year.

“This quarter's results reflect improving rough diamond prices combined with increasing sales and profit for the luxury brand segment. Both sides of our diamond business are performing well as we continue to achieve premium rough diamond prices and execute our luxury brand strategy,” said Robert Gannicott, Harry Winston Chairman and CEO.

To shore up its stockpile of polished diamonds it uses for luxury jewelry lines and to maximize the continued rise in prices for what many believe is a dwindling resource; Harry Winston in May announced that it is involved in the establishment a polished diamond investment fund. The fund is being managed by Diamond Asset Advisors AG, a Zurich based advisor with a background in both the diamond and financial services sectors. The fund will be structured as a limited partnership, of up to $250 million, offering institutional investors direct exposure to the wholesale market price of polished diamonds.

“Our recently announced relationship with Diamond Asset Advisors in the creation of a polished diamond acquisition fund represents an innovative way for the company to support its luxury brand growth objectives,” Gannicott said.

Other first quarter highlights, include:

* Consolidated EBITDA (earnings before interest taxes depreciation and amortization) in the first quarter of Fiscal 2012 increased 51 percent to $25 million, showing strength in both segments of the business, the company said. In the same period, the mining segment EBITDA increased 48.5 percent to $17.6 million and the luxury brand segment EBITDA increased 57.3 percent to $7.3 million.

* Consolidated operating profit was $4.7 million or double the operating profit of $2.3 million from a year ago, with mining operating profits down $300,000 and luxury brand profits up $2.7 million versus the prior year. Operating profit benefited from higher rough diamond prices and higher high-end jewelry and timepiece sales, the company said.
 
* Consolidated net profit attributable to shareholders for the first quarter was $3.6 million or $0.04 per share compared to net profit attributable to shareholders of $2.1 million or $0.03 per share in the comparable quarter of the prior year.

Neiman Marcus Q3 Sales Up 10%, Net Earnings Up 150%

Neiman Marcus reported a year-over-year increase in revenues of 9.9 percent to $983.8 million for its fiscal third quarter. Comparable revenues increased 9.7 percent. Operating earnings for the period ended April 30 increased 45 percent year-over-year to $123.2 million.

The Dallas-based luxury retailer said Friday that net earnings totaled $46.2 million for the 13-week period compared to $18.5 million in the prior year, a staggering 149.7 percent increase. EBITDA increased 23 percent to $169.9 million for the period.

For the 39 weeks ended April 30, the company reported total revenues of $3.08 billion compared to $2.87 billion in the prior year. Comparable revenues increased 7.3 percent. The Company recorded operating earnings for the 39 weeks ended April 30, 2011 of $312.3 million compared to $227.3 million for the comparable period a year ago, an increase of 37 percent.

The company’s year-over-year net earnings rose 200.9 percent to $93 million for the 39-week fiscal period, ended April 30. EBITDA increased 18 percent for the period to $457.2 million.

Signet Q1 Same Store Sales, Total Sales Up 10%

Signet Jewelers, the world’s largest specialty retail jeweler, reported strong sales results for the first quarter of FY 2012 led by a 10.2 percent increase in same store sales, compared to a rise of 5.8 percent for the first quarter of the prior year. Total sales for the period, ended April 30, also rose 10.2 percent to $887.3 million.

Operating income for the Bermuda-based company, which operates jewelry retail chains in the U.S. and U.K., improved by 310 basis points to 13.4 percent. As a result, income before income taxes and diluted earnings per share rose to $117.8 million, compared with $74.1 million during the prior fiscal year.  

“We are very pleased with our strong start to the year, leading to record results for the first quarter. Our performance was led by our U.S. division, with the U.K. division continuing to operate well in a challenging economy,” said Mike Barnes, Signet Jewellers CEO  “The strong sales momentum has continued into the start of the second quarter ... We remain well positioned to continue to increase sales productivity and achieve our financial objectives for this year.”

In the U.S., which accounted for 83.2 percent of total company sales for the period, sales increased 11.4 percent to $738 million. Same store sales rose 12.5 percent for the period. Signet operates 1,314 in the U.S., under the brands Kay Jewelers, Jared The Galleria Of Jewelry and a number of regional brands.

At Kay Jewelers, the company’s largest retail chain operation and the largest retail jewelry operation in the U.S., sales rose 13.4 percent to $435.4 million with same store sales up 13.9 percent. The average selling price was $360, a year-over increase of 11.8 percent. At Jared, total sales rose 12.7 percent to $227.8 million. Same store sales increased 11.8 percent for the period. The average selling price per unit for the period was $798, a 7.7 percent increase compared to the prior year.

In the U.K., which accounted for 16.8 percent of total company sales for the period, sales rose 4.5 percent to $149.3 million, mostly due to the strength of the British pound over the U.S. dollar. When the exchange rates were removed sales fell for the period by 1.3 percent. Same store sales rose 0.2 percent. Signet operates 538 stores in the U.K. under the brands H.Samuel, Ernest Jones and Leslie Davis.

 
On May 24, Signet, which trades on the New York Stock Exchange, entered into a $400 million senior unsecured multi-currency, five-year revolving credit facility agreement that will be used for working capital requirements and general corporate purposes. The new loan replaces an existing $300 million credit account entered in June 2008, which was due to expire in June 2013.

Signet operates approximately 1,852 specialty retail jewelry stores.

Tiffany Q1 Sales Up 20%, Profits Up 26%

Tiffany & Co. on Thursday reported that worldwide net sales increased 20 percent to $761 million while net earnings rose 26 percent to $81.1 million due to sales growth and improved margins. Management increased its earnings forecast for fiscal 2011 based on this higher than expected performance.

“We are pleased with the very strong start to the year,” Michael J. Kowalski, Tiffany chairman and CEO, said in a statement. “We achieved healthy sales growth in most regions, were able to improve gross margin despite higher product costs and achieved a significant increase in our operating margin.”

On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales and comparable store sales increased 16 percent and 15 percent, respectively, the New York-based luxury jewelry retailer said.

Net sales highlights by region for the quarter ended April 30 are as follows:

* In the Americas, which includes the U.S., Canada and Latin America, sales increased 19 percent to $374.7 million. On a constant-exchange-rate basis, total sales and comparable store sales rose 18 percent and 17 percent, respectively. Comparable Americas' branch store sales increased 15 percent and sales in the New York flagship store rose 23 percent. Combined Internet and catalog sales in the Americas rose 14 percent.

* Asia-Pacific sales increased 37 percent to $167.2 million. On a constant-exchange-rate basis, sales increased 31 percent and comparable store sales rose 26 percent due to substantial growth in most countries, particularly in the greater China region.

* Sales in Japan rose 7 percent to $123.4 million. On a constant-exchange-rate basis, both total sales and comparable store sales declined 3 percent. Stores that had closed due to the earthquake have since re-opened. Comparable store sales on a constant-exchange-rate basis increased in February, declined in March and rose in April.

* In Europe, sales increased 25 percent to $85.6 million. On a constant-exchange-rate basis, sales increased 19 percent while comparable store sales rose 15 percent due to strong growth in Continental Europe and modest sales growth in the U.K.

* Other sales declined 18 percent to $10.1 million. A decline in wholesale sales of rough diamonds more than offset increased wholesale sales of finished products to independent distributors within emerging markets.

The company currently operates 232 stores (96 in the Americas, 55 in Japan, 52 in Asia-Pacific and 29 in Europe), versus 221 a year ago.

Tifffany plans to open 19 new stores this year with—seven in the Americas, four in Europe and eight in Asia-Pacific, while closing a store in Japan.

“Worldwide sales growth in the early part of this second quarter is continuing to exceed our expectation, with solid performance in most regions,” Kowalski said. “Based on the better-than-expected first quarter results, we are increasing our earnings forecast for the year to $3.45 - $3.55 per diluted share (not including nonrecurring expenses) from $3.35 - $3.45 per diluted share previously.”

The company said that for the year, ended Jan. 31, 2012, it expects a net earnings increase of 18 percent.

It forecasts a mid-teens percentage increase in worldwide net sales. By region, it expects a mid-teens percentage increase in sales in the Americas, a mid-twenties percentage increase in both Asia-Pacific and Europe, and a modest sales decline in Japan.

Blue Nile Sets First Quarter Sales Record

Blue Nile, Inc. reported Thursday that net sales for the first quarter of 2011 increased 8.3 percent to $80.2 million, a first quarter record for the diamond and fine jewelry online retailer. Operating income for the quarter totaled $3.5 million. Net income totaled $2.4 million.

"We delivered record first quarter sales reflecting the strength of our consumer proposition and our relentless focus on perfecting the customer experience,” said Diane Irvine, Blue Nile CEO. “We remain focused on our key objective of building our business in the U.S. and internationally by investing in growth initiatives from product innovation and marketing to continued enhancement of the Blue Nile experience.”

First quarter financial highlights include:

* International sales grew 34.4 percent to $12.9 million, a record level for any first quarter in the company's history. Excluding the impact from changes in foreign exchange rates, international sales increased 28.1 percent.

* Gross profit for the quarter totaled $16.9 million, an increase of 7.1 percent. As a percent of net sales, gross profit was 21.1 percent compared to 21.3 percent for the first quarter of 2010.

* Selling, general and administrative expenses for the quarter were $13.4 million, compared to $12.2 million in the first quarter of 2010. This figure includes stock-based compensation expense of $1.7 million, compared to $1.8 million in the first quarter of the prior year.

The Seattle-based company in its guidance said it expects In its second quarter net sales to be between $82 and $85 million.

Bulgari Jewelry Sales Up 29.3%

The Bulgari Group said Tuesday that first quarter 2011 sales increased 27.5 percent, year-over-year to 253.8 million euros ($394 million) led by strong demand for all of its products throughout the world, particularly in China.

“The general recovery of the economic context, together with an extremely competitive offer in all product categories, very impactful communication initiatives and a constant improvement of the shopping experience had a very positive influence on the turnover, with a significant contribution from both the directly owned stores and the wholesale channel,” the Italian luxury jewelry house said in a statement.

The Rome-based company that will soon be under the LVMH umbrella, reported that jewelry sales (the company’s core business) increased by 29.3 percent to 114 million euros ($163.4 million), watch sales rose 22 percent to 50.6 million euros ($72.5 million), accessories sales jumped 19 percent to 20.7 million euros ($29.6 million), and perfume and cosmetic sales soared 33 percent to 60.1 million euros ($86.1 million).

All the geographical areas where the company operates registered very positive sales results. However, it was Asia that led the way. By itself, the continent accounted for nearly half of all sales for the company in the first quarter at 122.3 million euros ($175.3 million), a 33.5 percent increase. Sales in China alone soared 76 percent, year-over-year for the three-month period. Sales in Japan increased 10.5 percent to 39.4 million euros ($56.4 million), despite the prolonged closure of shops following the earthquake and tsunami that hit the country March 11.

While sales growth in the rest world wasn’t as dramatic, it was still robust. In Europe, sales rose 16.5 percent to 79.5 million euros ($114 million), with sales in Italy up 7.8 percent to 25 million euros ($35.8 million). Sales in the Americas increased 20.2 percent to 32.7 million euros ($46.9 million). In the Middle East and other areas where the Rome-based jewelry operates saw a 59.8 percent increase in sales to 19.4 million euros ($27.8 million).

Bulgari is a global player in the luxury market relying on a network of stores in exclusive shopping areas around the world and on selected distributors. There are 294 Bulgari stores in the world of which 177 are directly owned. The company has a product portfolio that ranges from jewels and watches to accessories and perfumes.