Tiffany Q2 Sales Fall 16% to $612.5 Million

Second quarter net sales by U.S. luxury retailer Tiffany & Co. beat company expectations, yet still fell 16 percent to $612.5 million. Net earnings were $56.8 million, down 29.7 percent from the $80.8 million earnings in the prior year.

Tiffany, usually immune from recessionary woes, was hit together with other high-end retailers by the recent financial crisis.

On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales declined 14 percent and comparable store sales declined 16 percent.

In the Americas, sales declined 23 percent to $324.9 million in the second quarter. Comparable U.S. store sales declined 27 percent and while sales in the New York flagship store declined 30 percent.

Combined Internet and catalog sales in the U.S. declined 8 percent in the second quarter.

Sales growth in the Asia-Pacific region was hurt by continued declines in Japan. As a result, regional sales declined 1 percent to $211.9 million.   

In Europe, sales decreased 4 percent to $68.3 million.

“We are pursuing a more modest pace of store expansion this year, in light of economic conditions, but will nevertheless increase the number of Company-operated stores by about 6 percent,” said Chairman and CEO Michael J. Kowalski.

In its outlook, Tiffany said sales trends in August are meeting expectation. For the full year, the company expects a worldwide sales decline of approximately 10 percent, including regional sales declines in the mid-teens percentage in the Americas, a low-single-digit percentage in the Asia-Pacific region, a low-single-digit percentage in Europe, as well as (d) a 50 percent decline in other sales.

It further expects annual net earnings from continuing operations of $1.65 - $1.75 per diluted share, this compared to the previous forecast of $1.50 - $1.60 per diluted share.