Tiffany & Co. on Thursday reported that worldwide net sales increased 20 percent to $761 million while net earnings rose 26 percent to $81.1 million due to sales growth and improved margins. Management increased its earnings forecast for fiscal 2011 based on this higher than expected performance.
“We are pleased with the very strong start to the year,” Michael J. Kowalski, Tiffany chairman and CEO, said in a statement. “We achieved healthy sales growth in most regions, were able to improve gross margin despite higher product costs and achieved a significant increase in our operating margin.”
On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales and comparable store sales increased 16 percent and 15 percent, respectively, the New York-based luxury jewelry retailer said.
Net sales highlights by region for the quarter ended April 30 are as follows:
* In the Americas, which includes the U.S., Canada and Latin America, sales increased 19 percent to $374.7 million. On a constant-exchange-rate basis, total sales and comparable store sales rose 18 percent and 17 percent, respectively. Comparable Americas' branch store sales increased 15 percent and sales in the New York flagship store rose 23 percent. Combined Internet and catalog sales in the Americas rose 14 percent.
* Asia-Pacific sales increased 37 percent to $167.2 million. On a constant-exchange-rate basis, sales increased 31 percent and comparable store sales rose 26 percent due to substantial growth in most countries, particularly in the greater China region.
* Sales in Japan rose 7 percent to $123.4 million. On a constant-exchange-rate basis, both total sales and comparable store sales declined 3 percent. Stores that had closed due to the earthquake have since re-opened. Comparable store sales on a constant-exchange-rate basis increased in February, declined in March and rose in April.
* In Europe, sales increased 25 percent to $85.6 million. On a constant-exchange-rate basis, sales increased 19 percent while comparable store sales rose 15 percent due to strong growth in Continental Europe and modest sales growth in the U.K.
* Other sales declined 18 percent to $10.1 million. A decline in wholesale sales of rough diamonds more than offset increased wholesale sales of finished products to independent distributors within emerging markets.
The company currently operates 232 stores (96 in the Americas, 55 in Japan, 52 in Asia-Pacific and 29 in Europe), versus 221 a year ago.
Tifffany plans to open 19 new stores this year with—seven in the Americas, four in Europe and eight in Asia-Pacific, while closing a store in Japan.
“Worldwide sales growth in the early part of this second quarter is continuing to exceed our expectation, with solid performance in most regions,” Kowalski said. “Based on the better-than-expected first quarter results, we are increasing our earnings forecast for the year to $3.45 - $3.55 per diluted share (not including nonrecurring expenses) from $3.35 - $3.45 per diluted share previously.”
The company said that for the year, ended Jan. 31, 2012, it expects a net earnings increase of 18 percent.
It forecasts a mid-teens percentage increase in worldwide net sales. By region, it expects a mid-teens percentage increase in sales in the Americas, a mid-twenties percentage increase in both Asia-Pacific and Europe, and a modest sales decline in Japan.
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