Tiffany Worldwide Net Sales +7% in Q2 but Net Earnings Drop 16%

(IDEX Online News) – Tiffany & Co. has announced that its net sales increased 7 percent in the second quarter (on a constant exchange rate basis). However, net earnings declined 16 percent.

Worldwide net sales were $991 million, compared with $993 million a year previously. Net earnings dropped 16 percent to $105 million from $124 million the prior year, on the back of a strong US dollar.

In the first half of the year (ended July 31), net sales declined 3 percent to approximately $2 billion. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into US dollars both worldwide net sales and comparable store sales increased 7 percent  due to growth in Japan, Europe and Asia-Pacific, as well as increased sales of fashion gold jewelry and statement jewelry.

On a constant exchange rate basis, both total sales and comparable store sales in the second quarter were at or largely above the 2014 figures.

In the Americas in both periods (second quarter and first half), higher domestic consumer spending was offset by lower foreign tourist spending. Total US sales were $475 million in the second quarter, a 2-percent reduction over 2014.

In the Asia-Pacific region, total sales increased 4 percent to $425 million in the second quarter.

The results in Japan were mixed, partly as a result of the 2014 consumption tax, which was instituted on April 1, , as in the first half of last year comparable store sales increased 30 percent. Total sales in Japan rose 5 percent to $125 million in the second quarter, but declined 16 percent to $247 million in the first half of the year.

In Europe, total sales and comparable store sales both rose 19 percent, on the back of both UK and continent-wide growth, driven by higher-spending foreign tourists. Total sales in Europe rose 2 percent to $123 million in the second quarter and 2 percent to $225 million in the first half.

Other sales on a constant-exchange-rate basis in the second quarter declined 27 percent in total due to lower wholesale sales of diamonds but rose 8 percent on a comparable store sales basis; in the first half total sales declined 12 percent but comparable store sales rose 4 percent. Other sales declined 33 percent to $23 million in the second quarter and declined 19 percent to $58 million in the first half.

 “We entered this year expecting translation and tourism-related pressures on sales and earnings from the exceptionally strong US dollar, as well as challenging economic conditions in certain markets,” said CEO Frederic Cumenal.

“While the adverse effects from the strong dollar have been even more significant than initially expected, we met our overall expectations in the first half of the year. We are pleased with responses to new designs, including our Tiffany T jewelry and CT60™ watch collections, and are excited about upcoming additions being made to bolster sales across jewelry categories and price points."

Looking ahead, Mr. Cumenal added, "In light of the difficult environment exacerbated by the strong dollar and ongoing external uncertainties, we are tempering our full year earnings forecast.”