For the quarter ended Oct. 31, Tiffany posted net earnings rose of $95 million, or 73 cents a share, compared with $63 million, or 49 cents a share, a year ago. That was well ahead of analysts’ average estimate expecting a profit of 58 cents a share.
Net sales increased 7% to $911 million, or rose 11% on a constant exchange rate basis. Comparable store sales rose 7% thanks to growth seen in all regions.
Raises Full Year Outlook
Total sales in the Americas region increased 4% to $417 million while comparable store sales in the Americas were up 1% due to strong results from Tiffany’s New York flagship.
In the Asia-Pacific, total sales grew 27% to $238 million, helped by comparable store sales growth of 22%. However, in Japan, the negative translation of a weaker yen versus the dollar resulted in a 13% sales decline to $128 million. Using constant exchange rates, however, Japan sales rose 9% as comparable store sales gained 5%.
Sales in Europe rose 7% to $104 million, led by sales in the United Kingdom, as comp store sales rose 2%.
“We are very pleased with our overall results. Worldwide sales growth in the quarter demonstrated the growing power of the Tiffany & Co. brand and the benefits of our expanding global presence,” said Michael J. Kowalski, chairman/ceo.
“Operating earnings rose faster than sales, reflecting favorable product cost trends and ongoing well-controlled expenses. We’re experiencing excellent customer response to our expanded fashion jewelry designs, highlighted by the Atlas collection, as well as continued growth in our fine and statement jewelry, with particular strength in our yellow diamond collection.”
Gross profit as a percentage of net sales increased 2.6 points to 57%, from 54.4% a year ago largely the result of reduced product cost pressure, as well as price increases that Tiffany & Co. implemented in earlier this year. The company also observed a shift in the sales mix toward higher-priced, lower gross margin products has continued to offset a portion of these benefits.
Selling, general and administrative expenses increased 5% largely due to incremental labor and store-related costs, and rose 6% in the year-to-date.
The strong results led Tiffany to increase its full year net earnings in the range of $3.65 to $3.75 a share, well above its prior forecast of $3.50 to $3.60 a share. In 2012, the company earned $3.25 a share. Worldwide sales are expected to increase by a mid-single-digit percentage.