TORONTO (miningweekly.com) – Toronto-based Harry Winston Diamond Corp lost $73-million in the three months ended January 31, after production and sales declined, and the firm recorded a goodwill write-down relating to its retail operations.

Harry Winston reported net earnings of $90,4-million in the same period a year earlier.

For the full year, the firm achieved net earnings of $70,1-million, down from $106,4-million in the prior year, after the company recorded a noncash goodwill writedown relating to its retail operations of $93,8-million in the fourth quarter.

The write-down was partially offset by a $59,1-million net foreign exchange gain for the year, Harry Winston said.

In the 2007 financial year, the company had a net $43,4-million foreign exchange loss.

The high-end jewellery retailer, which also owns 40% of the Diavik diamond mine, in Canada's Northwest Territories, said consolidated sales for 2008 decreased to $609,2-million, compared with $679,3-million in the previous year.

Fourth-quarter sales were also lower, at $118,4-million, compared with $188,2-million in the three months ended January 31, 2008.

Last month, Harry Winston agreed to sell 19,9% of the company, plus an effective 15% interest of the Diavik diamond mine, to Canadian gold-miner Kinross, for $150-million.

The deal closed earlier this week.

In response to weak demand for diamonds, Harry Winston and Rio Tinto, which owns the rest of Diavik and is the operator of the mine, have decided to halt operations for two six-week planned shutdowns this year, and will defer the start-up of underground mining, the company said this week.

"Credit is the vascular system of the diamond industry. Its rapid decline last October shocked the diamond supply chain to a sudden standstill that persisted into this year,” Harry Winston CEO Robert Gannicott said in a statement on Thursday.

“Our response, and that of our mine operating partner, Rio Tinto, has been defensive while preserving the ability to increase production promptly when conditions have sufficiently improved by reducing capital and operating costs without jeopardising the future of our production and sales platforms.”

The company is well positioned for when economic conditions improve, Gannicott said.

“The Diavik mine remains one of the highest-margin diamond mines and Harry Winston a premier diamond brand.”

Harry Winston, formerly known as Aber Diamonds, bought high-end jewellery retailer Harry Winston in 2006.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.