Strong U.S. dollar affects Tiffany’s financial results for 2015

NEW YORK, NY - JANUARY 12:  A flag for a Tiffany & Co. store hangs along Wall Street in Manhattan on January 12, 2015 in New York City. Shares in the luxury jewelry chain fell on news of weaker than expected holiday sales. Sales in November and December dropped 1 percent to $1.02 billion worldwide.  (Photo by Spencer Platt/Getty Images)

Tiffany has released its 2015 full year and fourth quarter results, reporting an overall 2% rise in full year sales in local currencies, but an overall 3% decline as sales and earnings were negatively affected by the strong U.S. dollar.

The figures covered the financial results for the 12 months of last year, and the three months of the fourth quarter, ending on January 31 2016.

Worldwide, net sales rose 2%, owing to higher sales in Asia-Pacific, Japan and Europe. Comparable store sales were equal to the prior year, however, net sales worldwide declined 3% to $4.1 billion.

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Throughout the year, results were affected by the strong U.S. dollar, which had a negative effect on the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S., as well as, to varying degrees, the effects of macro-economic challenges and uncertainties on consumer spending.

Net earnings of $493.8 million were 9% lower than last year’s $545.1 million; this decline was due to lower sales and higher selling, and general and administrative expenses.

Issuing its projections for 2016, the company anticipates minimal growth in net sales on a constant, exchange-rate basis, and for net earnings to range from unchanged to a mid-single-digit decline, compared with 2015.

Chief executive officer, Frederic Cumenal said: “We faced various challenges during the year that negatively affected our financial results, especially related to the strong U.S. dollar. However, our management team continued to pursue initiatives to strengthen Tiffany’s abilities to serve our clientele effectively and deliver extraordinary products and experiences. This included introducing a range of enticing new products spanning diamonds to silver jewellery, and enhancing our global store base. Worldwide sales growth of only 2% on a constant-exchange-rate basis, or down 3% as reported, along with the lack of earnings growth, did not meet the forecasts we had communicated at the start of the year; however, we were pleased with an increase in gross margin, strong free cash flow, and our ability to return cash to shareholders through another dividend increase and share repurchases.”

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