Tiffany & Co. has reported mixed results for the two-month ‘holiday’ period ended December 31.
In Europe, on a constant-exchange-rate basis total sales rose 4% and comparable store sales declined 2%.
Sales rose in the UK, but performance was mixed across continental Europe with a notable decline in France, all of which reflected varying levels of demand among local customers and foreign tourists.
In US dollar terms, total sales in Europe were 4% below the prior year to $128 million (£90m).
Across the company as a whole results were negatively affected by the strong US dollar and weak tourist spending in a number of markets.
On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into US dollars, worldwide net sales declined 3%, which the report states is down to declines in the Americas and Asia-Pacific offsetting growth in Japan and Europe. Comparable store sales declined 5%.
The report says there were no noteworthy differences in performance among jewellery categories.
Reported in U.S. dollars, worldwide net sales of $961 million (£677m) were 6% lower than the prior year.
Frederic Cumenal, chief executive officer, states: “In the holiday period, we continued to feel pressure from the strong US dollar on the translation of non-US sales into dollars and on foreign tourist spending in the US, which we expect will continue into 2016.
“We believe overall sales results were negatively affected by restrained consumer spending tied to challenging and uncertain global economic conditions and we expect 2015 earnings to come in at the low end of our previously-set range of expectations. Nonetheless, we were pleased with initial sales of our new fashion and fine jewellery designs, a solid increase in worldwide e-commerce sales and our ability to maintain gross margin at normal levels.”
Management expects net earnings in the year ending January 31, 2016 to decline approximately 10% (compared with its previously-reported forecast calling for a 5%-10% decline) from last year’s $4.20 per diluted share (excluding the loan impairment charge in the second quarter of 2015 and a debt extinguishment charge in 2014).
In addition, this forecast excludes a charge of approximately four cents per diluted share being recorded in the fourth quarter for staff and occupancy reductions. This forecast does not assume recording any additional loan impairment charges. The Company maintains its forecast to generate at least $500 million of free cash flow in the full year.
While financial plans for 2016 have not been finalised, management currently believes that the strong dollar and global macro challenges will likely result in minimal growth in net sales and net earnings, as reported in dollars and excluding charges in 2015, for the year. All assumptions and expectations are approximate and may or may not prove valid.
The Company expects to report its fourth quarter and full year results on March 18.