Sales climbed 22% to $633.6 million, reversing last year’s 22% drop. Comparable store sales rose 10%. In response, Tiffany raised its earnings projection for the year to $2.55 to $2.60 a share from a previous projection of as much as $2.50. Gross margin rose to 57.8% from 55.9%, after declining in each of last year’s quarters.
The improved projection is based upon comparisons with last year’s low results and a greater confidence there will be “no deterioration in the macro environment or in consumer confidence,” James Fernandez, chief financial officer, said in a conference call with market analysts today.
A ‘Modicum of Caution’ Ahead
According to Michael Kowalski, chairman and ceo, sales improvements were “broad based” across its international markets. Similarly, merchandise across retails sold too. Jewelry costing more than $50,000 moved along as well as items less than $100 as people began to treat themselves to necklaces, rings and other non-essential merchandise, market analysts said.
Despite the increased earning projects, Kowalski, like many other luxurygoods executives, took cautious approach to the rest of the year. “We are very encouraged with first quarter results, but believe it is prudent to maintain at least a modicum of caution in our outlook due to global economic uncertainties.”
The company’s U.S. sales increased, too, rising 22%, which was better than company expected and compared with a 31% decline in 2009. Increased transactions in all major product categories and bigger average transaction sizes drove the growth, the company said.
Asia on the Rise
As has been the case with other luxurygood companies, most of Asia showed the biggest increases. Sales in the Asia-Pacific region outside Japan rose 50%, while Japan remained soft with a 2% drop.
Internet and catalogue business grew 23%. Tiffany has been expanding its online operations with a launch for continental Europe this year.
Tiffany is increasing its spending on marketing this year and accelerating the pace of its store openings to return to more of its traditional pace of spending. Some of that marketing will be aimed a new collections, such as a line of yellow diamond jewelry, expanding the brand’s watch business and unveiling a handbag and accessories collection this year.