Harry Winston - multi-faceted - FT.com Dirty and sexy are, in many contexts, a delightful combination. But the mix has not worked out well for Canada's Harry Winston, which is in both the dirty business of mining and the sexy business of jewellery retail. Rumours have long circulated that it is in talks to sell its retail operation to a luxury conglomerate such as LVMH or PPR. The chatter has grown so feverish lately that the company issued a statement on Thursday saying that, while it has received a few flirty phone calls, there is nothing hot and heavy going on. A sale of the retail operations would be a big strategic swing. Winston owns a 40 per cent stake in the Diavik diamond mine in north-west Canada; Rio Tinto owns the rest and runs the operation. While diamonds do not flow directly from Diavik into Winston's stores, the company takes delivery of diamonds from Rio, sorts them and sells then on to polishers. It also buys finished diamonds from many of these polishers. Management touts three advantages to this arrangement: knowledge of end markets allows it to price its raw diamonds optimally; tight relationships with polishers, as both supplier and customer, allows Winston to strike better deals with them; and owning the mine provides a natural hedge for the retailer when input costs rise. All this may be true. But the arguments for the combination do not outweigh the fact that investors in Winston must own a miner and a retailer in a fixed combination, regardless of their estimation of the two operations or the two industries. What is Winston's natural investor base? At any rate, even if this odd combination is broken up, the investment bankers who earn fees on the deal may be the only ones feeling sexy. Investors could be left with the dirt: the stock is down nearly 70 per cent in five years.