Expansion of Existing Salon Network - Harry Winston

13 Dec '07

2 min read

Harry Winston Diamond Corporation's success at marketing diamonds and in operating the business of Harry Winston Inc is dependent on the services of key executives and skilled employees, as well as the continuance of key relationships with certain third parties, such as diamantaires.

The loss of these persons or the Company's inability to attract and retain additional skilled employees or to establish and maintain relationships with required third parties may adversely affect its business and future operations in marketing diamonds and in operating its retail segment.

Expansion of the Existing Salon Network:
A key component of the Company's retail strategy is the expansion of its existing salon network.

This strategy requires the Company to make ongoing capital expenditures to build and open new salons, to refurbish existing salons from time to time, and to incur additional operating expenses in order to operate the new salons. To date, much of this expansion has been financed through borrowings by Harry Winston Inc.

There can be no assurance that the expansion of the salon network will prove successful in increasing annual sales or earnings from the retail segment, and the increased debt levels resulting from this expansion could negatively impact the Company's results from operations in the absence of increased sales and earnings.

Harry Winston Diamond Corporation

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