Harry Winston is expecting lower than forecast rough diamond sales in the current third quarter as it held-off from selling goods in the current unstable market conditions.
''Although we continue to make small sales of specific rough diamond assortments to specialist clients, we have elected not to make broader rough diamond sales into an unstable market that seeks bargains,'' the company's chief executive, Robert Gannicott, said. ''As a result, significant rough sales revenue from this period will be deferred into the fourth quarter, and possibly subsequent periods.''
He noted that the current time of the year is traditionally quiet in the rough market due to the Jewish and Indian holiday periods, but the company expects a return to normality in November as demand increases in the lead-up to the Christmas, Indian wedding and Chinese New Year seasons.
However, the company noted that European banks’ exposure to the current sovereign debt crisis was having an impact on growth in the diamond polishing sector.
''The credit facilities essential to the diamond polishing industry are largely underwritten by European banks that are currently under stress with European sovereign debt issues,'' Harry Winston explained. ''The facilities have not been withdrawn or reduced, but neither have they been increased against higher unit prices.''
As a result, the company noted that cutters are now selling polished and reducing rough purchases to increase liquidity even as jewelry retail consumption continues at levels higher than in 2010. Gannicott stressed that the current strain is not having a dramatic impact on consumer spending, as had the financial collapse of 2008.
Harry Winston reported that jewelry and watch sales at its retail segment have continued to increase in the current third fiscal quarter, with particularly strong sales in the U.S. and Japan, and with Chinese customers representing a growing share of its clientele in all regions.
-Rapaport
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