New York—Tiffany & Co. today reported better-than-expected first quarter sales thanks especially to increases in Asia and promotions surrounding the brand’s 175th anniversary and “The Great Gatsby” film.
For the quarter ended April 30, the retail jeweler posted a 2.5% increase to $83.6 million, or 65 cents a share, compared to $81.5 million, or 64 cents a share, a year ago. Excluding costs related to moving its offices last year, Tiffany’s adjusted earnings were 70 cents a share, beating analysts’ average estimate for 52 cents a share.
“We are pleased with this start to the year. Worldwide, first quarter sales exceeded our expectations, enabling us to improve our sales leverage on fixed expenses and achieve earnings growth,” said Michael J. Kowalski, chairman/ceo. “In addition, we celebrated Tiffany’s 175th anniversary with our very successful Blue Book event and promotional activities surrounding the debut of the film “The Great Gatsby,” for which we designed the jewelry.”
Tiffany’s results mirror those of several other luxury brands, such as Coach and Burberry, which had seen slowdowns in China last year, and softness in other key markets. But first quarter has seen many of those rebound.
Total net revenue rose 9.3% to $895.4 million, ahead of analysts’ consensus for $855.1 million in sales. Comparable store sales increased 8%, a big improvement over fourth quarter when comp sales were flat.
In Asia-Pacific, which now accounts for about 20% of all sales, sales grew by 14%. In Japan, Tiffany’s second biggest market, sales rose 2% which would have been a 20% increase except for the yen’s depreciation.
Silver Jewelry Sales Still Lag
In the Americas, sales were up 6% helped by better sales at its Fifth Avenue flagship. And in Europe, total sales were 6% higher than last year due to sales growth across continental Europe.
Gross margin was 56.2% versus last year’s 57.3% due primarily to “a shift in sales mix toward higher-priced, lower gross margin products.” In addition, gross margin, in comparison to recent quarters, benefited from diminished product cost pressure and recent price increases.
Although Tiffany was off to a strong start for its fiscal year, Tiffany executives warned that the yen depreciation, the slowly recovering U.S. economy and continued weakness in its sterling silver business could factor into future results.
Indeed, once again, Tiffany’s higher margin silver jewelry business, which accounts for about 30% of the company’s jewelry sales, was down in the first quarter.
According to Patrick McGuiness, chief financial officer, the company is introducing new designs this year and plans to increase marketing as well.
“We continue to anticipate that silver jewelry sales growth in 2013 will lag growth in higher price categories,” McGuiness told analysts on a conference call today.
The company maintained its previous forecast for the year for earnings in the range of $3.43 to $3.53 with worldwide net sales increasing by a “mid-single-digit percentage.”
Analysts expect the company to earn $3.48 a share for the fiscal year.