Tiffany’s 2007 Sales Rise, Cautious About the U.S. in 2008
May 03, 08
Tiffany & Co. reported strong results for the year and quarter ended December 31. Net sales in the fiscal year increased 15 percent to $2.94 billion. Net earnings increased 20 percent to $303.77 million compared with $253.93 million in 2006.
On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales increased 13 percent, and worldwide comparable store sales increased 7 percent.
Net sales in the fourth quarter rose 10 percent to $1.053 billion.
On a constant-exchange-rate basis, net sales increased 7 percent due to incremental sales from newly-opened stores and a 1 percent increase in worldwide comparable store sales.
However, net earnings in the fourth quarter declined 16 percent to $118.25 million, adversely affected by several one-time items.
The company was also hurt by the fall of diamond miner Tahera. Tiffany does not expect the miner to pay back its loans and is writing off nearly $48 million.
CEO Michael J. Kowalski said he was “pleased” with Tiffany’s strategic progress and overall financial performance. In his outlook for 2008, Kowalski said he expects to see robust growth in Tiffany’s non-U.S. markets (other than Japan), which are already experiencing growth in excess of 10 percent in the quarter-to-date.
“We remain cautious about the U.S., although comparable store sales are currently increasing slightly. We still expect a slight decline in comparable U.S. store sales in the first half of the year,” Kowalski said.
For the full year, net sales growth of approximately 10 percent is projected, including comparable store sales increasing by low-single-digits in the U.S. and mid-single-digits internationally. This also assumes the opening of six new U.S. stores and approximately 20 international locations.
In related news, Tiffany has opened a store in Chengdu, China. This is Tiffany’s seventh location in China. The approximately 2,200-square-foot boutique is located in Maison Mode, a luxury retail center on Renmin South Road, the city’s fashionable shopping area.