Tiffany & Co Posts Soaring Profit And Revenue

(IDEX Online News) – Tiffany & Co reported profit and revenue in the first quarter that were significantly higher than analysts' expectations due to a boost in sales from Tiffany’s lower-cost collections.

Tiffany reported $1 billion in first quarter revenue, beating the analysts' consensus figure of $953 million and a 13 percent jump compared to the same quarter in 2013. On a constant currency basis, the jeweler said its worldwide net sales increased 15 percent and its same-store sales increased 11 percent for the quarter.

The retailer’s net income increased to $125.6 million, a 50-percent jump over the $83.5 million reported for the prior-year quarter.

“This is an excellent and encouraging start to the year,” Michael Kowalski, Tiffany chairman and CEO, said in a statement. “We were pleased with the strong and broad-based sales growth across most regions and product categories and our ability to leverage those improved sales into very significant growth in operating and net earnings. Strength in fine and statement jewelry sales continued, while sales of our new or expanded jewelry collections accelerated, led by our Atlas collection.”

The Atlas collection is one of Tiffany’s lower-cost collections — some pieces retail for the relatively low amount of $125 — and the success of the line drove sales in the U.S.

“Despite snow storms that affected some of our stores in the northeast, we enjoyed very good Valentine’s Day results,” Mark Aaron, vice president of investor relations, noted in a conference call with investors. He also reiterated a theme from prior quarters, noting that consumers have an increasing interest in colored diamonds and particularly yellow diamonds.

Worldwide net sales rose 13 percent to $1.0 billion. On a constant-exchange-rate basis, worldwide net sales rose 15 percent and comparable store sales rose 11 percent due to growth in most regions.

In the Americas region, total sales increased 8 percent to $439 million. On a constant-exchange-rate basis, total sales rose 9 percent and comparable store sales rose 8 percent, primarily due to geographically broad-based growth across the U.S.

In the Asia-Pacific region, total sales rose 17 percent to $261 million. On a constant-exchange-rate basis, total sales increased 19 percent and comparable store sales rose 10 percent with noteworthy growth throughout Greater China and in Australia.
Sales in Japan surged 20 percent to $174 million. The results were boosted by the fact that a consumption tax hit Japanese consumers on April 1, so Japanese demand in March was “exceptionally” strong. Once the consumption tax hit, Tiffany saw a sales decline in April — but nonetheless, the company is reiterating its forecast of full-year sales growth in Japan.

In Europe, total sales rose 9 percent to $101 million. On a constant-exchange-rate basis, total sales rose 2 percent and comparable store sales declined 3 percent. Trends were similar in the U.K. and in continental Europe.

Other sales increased 39 percent to $37 million, primarily due to retail sales growth which included 18 percent comparable store sales growth in the United Arab Emirates and the opening of the first Company-operated Tiffany store in Russia. Other sales also benefited from an increase in wholesale sales of diamonds; such diamonds are a result of the company's rough diamond sourcing operations.

Tiffany opened four stores in the first quarter (including a major store on the Champs Elysees in Paris) and closed one in the U.S. At April 30, 2014, the company operated 292 stores (121 in the Americas, 72 in Asia-Pacific, 55 in Japan, 38 in Europe, five in the U.A.E. and one in Russia), versus 275 stores (115 in the Americas, 66 in Asia-Pacific, 55 in Japan, 34 in Europe and five in the U.A.E.) a year ago.