New York—Citing continued strong demand in China, Tiffany & Co. today reported that its second quarter profit rose 16%. Sales in the Americas were more muted with comparable store sales basically flat.
Still, the luxury jeweler raised its full year profit forecast.
For the quarter ended July 31, Tiffany posted net income of $106.78 million, or 83 a share, compared with net income of $91.80 million, or 72 a share, in the prior-year quarter. That was better than the 74 cents a share estimate analysts expected.
Total worldwide sales increased 4% (8% excluding currency exchanges) to $925.88 million, missing analysts’ estimate for $941.37 million in sales. Comparable store sales rose 5% “due to growth in most regions.”
Sales in Asia-Pacific were up 20% to $208 million with comp store sales rising 13%, helped by strong sales growth in Greater China.
Figures Helped by Drop in Precious Metals Prices
In the Americas, total sales increased 2% to $444 million, but comparable store sales were unchanged in the quarter and rose 1% in the half, led by growth in Tiffany’s New York flagship store sales.
Although sales rose in dollar terms in the Americas after Tiffany increased prices and the highest-priced jewelry sold well, the company saw declines in unit sales, particularly in moderately priced fashion jewelry, Mark Aaron, a company spokesman, told analysts on a conference call.
European sales continued to rebound, rising 11% to $111 million with comparable store sales up 7% “due to sales growth in the United Kingdom and most of continental Europe.”
Business in Japan continued to be strong but the negative effect of a substantially weaker yen caused total sales to decline 14% to $136 million. However, on a constant-exchange-rate basis, total sales increased 7% in the second quarter due to comparable store sales growth of 8% with strong growth in engagement and higher-end jewelry categories.
Gross margin widened to 57.5% compared with 56.3 percent a year earlier. “Diminishing product cost pressure and price increases” also aided margins, the company said.
“Total sales growth met our objective due to solid performance in most regions, and with particular strength in our statement and fine jewelry product categories. We were pleased with the results of our efforts to improve gross margin which, combined with well-controlled expenses, yielded a solid increase in operating margin,” Chairman/CEO Michael Kowalski said.
Tiffany’s second quarter results got a boost from the drop in precious metals costs as well as the increase in price after the company held them for the last year. Although more affluent shoppers paid for higher-end merchandise, the lower price range jewelry failed to meet estimates. Tiffany also faced increasing competition from such designer jewelers as David Yurman and Ippolita, the company noted.
“It’s lower silver costs they are benefiting from,” Brian Yarbrough, an analyst with Edward Jones & Co. told Bloomberg News. The sales deceleration is “concerning.”
Tiffany raised its fiscal full year forecast to a range between $3.50 to $3.60 a share, up from its previous forecast for $3.43 to $3.53 a share. Worldwide sales are still expected to grow in a mid-single-digit percentage.
“Looking forward, we are equally excited about the initiatives we are pursuing in product development, marketing communications and store expansion, all intended to further enhance Tiffany’s strong brand position and take fuller advantage of its long-term growth opportunities in the global luxury market,” Kowalski said.
Analysts’ average estimate expects Tiffany to hit $3.53 a share in full year earnings on annual sales of $4.05 billion.
For commercial purposes, extract supplements can be obtained from the fruit of the pericarp. Garcinia cambogia reviews is performed by a physician Chen and Oz to prove that it is an herb for weight loss, a lot of research has been done. Studies, Garcinia cambogia extract supplementation decreases the weight of the body fat accumulation, was shown to have a positive effect on prevention. We are important substances such as cholesterol (LDL), reduces the serum leptin and triglycerides. In addition, it will increase the level of serotonin and cholesterol (HDL). The study also, Garcinia cambogia extract supplements, has proven that there are no significant adverse effects on many of the eight weeks, such as its use.