Tiffany & Co. full-year European sales rise 9%

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Brand opens 14 stores with fine and statement jewellery driving sales.

Tiffany & Co. has today released its financial results for Q4 and full year ended January 31, 2014, with worldwide net sales rising 5% in the quarter and 6% for the full year.

The company reported a net loss in Q4 owing to a charge related to the rulings in its arbitration proceedings with Swatch Group; however, excluding that and specific charges recorded in the first quarter, its net earnings increased 6% in the fourth quarter and 15% in the full year owing to sales growth and improved operating margins.

In Europe, total sales increased 10% to $161 million (£97.6m) in the fourth quarter and rose 9% to $470 million (£285m) in the full year. On a constant-exchange-rate basis, total sales rose 7% in both the quarter and full year; comparable store sales rose 2% in the quarter and 4% in the year due to growth in most countries.

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Tiffany & Co. chairman and chief executive officer said: "We are proud of our performance this past year. Sales and operating earnings (excluding the arbitration-related charge) rose to record levels. Sales growth was led by fine and statement jewellery, new or expanded jewellery collections including the Atlas, Ziegfeld and Harmony collections, and continuing strength in our iconic jewellery designs.

"Tiffany’s marketing communications more effectively engaged global consumers wherever they shopped, our distribution network was expanded by 14 additional stores, and everywhere the store experience was enhanced by improved visual merchandising. And we made important additions to our management team to strengthen our ability to capitalize on the global growth opportunities before us."

Fourth Quarter
With a view to the fourth quarter of the full year to January 31 2014, Tiffany’s worldwide net sales increased 5% to $1.3 billion (£788.4m). On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into US dollars, worldwide net sales increased 9%, and comparable store sales rose 6% as a result of increased sales in all regions.

In the quarter, the Company recorded a net pre-tax charge of $473 million (££287m), related to what it terms "an adverse arbitration ruling" with Swatch Group, which resulted in a net loss of $104 million (£63m).

Excluding this charge, Tiffany’s net earnings rose to $190 million (£115m) in its fourth quarter, from $180 million a year ago.

Full Year
For the 12 months to January 2014, Tiffany’s worldwide net sales increased 6% to $4 billion (£2.4bn). On a constant-exchange-rate basis, worldwide net sales rose 10% and comparable store sales rose 6% due to growth in all regions.

For the year, its net earnings were $181 million (£109m). Tiffany’s net earnings increased 15% to $481 million (£292m) from $416 million in the prior year, excluding the aforementioned charge in the fourth quarter, as well as expenses of $9 million that had been recorded in this year’s first quarter for specific staff and occupancy reductions.

Global Sales
In terms of location, in the Americas region Tiffany’s total sales rose 6% to $659 million (£399m) in the fourth quarter and 5% to $1.9 billion (£1.15bn) in the full year. On a constant-exchange-rate basis, total sales rose 7% in the quarter and 5% in the full year; comparable store sales increased 7% in the quarter due to growth in most markets, and rose 3% in the full year led by growth in New York flagship store sales as well as modest growth in branch store sales.

Total sales in the Asia-Pacific region increased 8% to $275 million (£167m) in the fourth quarter and 17% to $945 million (£573m) in the full year. On a constant-exchange-rate basis, total sales rose 11% in the quarter and 18% in the full year; comparable store sales increased 4% in the quarter due to growth in Greater China and most other markets, and increased 11% in the year due to broad-based sales growth across the region.

Its business in Japan was said to have performed well throughout the year but owing to the weaker yen, total sales declining 12%. However, on a constant-exchange-rate basis, total sales increased 8% in the fourth quarter and 11% in the full year, with 8% and 10% growth in comparable store sales.
As of January 31 2014, Tiffany operated a total 289 store, having added 14 stores in 2013. It presently operates 121 store in the Americas, 72 in Asia-Pacific, 54 in Japan, 37 in Europe and five in the UAE.

Kowalski added: "Looking forward to 2014, our management team is enthusiastic and focused on delivering healthy rates of sales and earnings growth. We are excited about our new product, marketing communications, and store expansion plans for the coming year, and look forward to delivering the promise of the Blue Box to an ever-growing global audience."

Tiffany’s management forecasts that its worldwide net sales will increase by a high-single-digit percentage in US dollars and on a constant-exchange-rate basis, with all regions expected to achieve growth in their total sales and comparable store sales.

It plans to add 13 company-operated stores to its line-up, and will close four existing stores: opening four in the Americas, five in Asia-Pacific, two in Japan, and one each in Europe and Russia, while closing one each in the Americas, Asia-Pacific, Japan and the UAE.
 

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