European Q4 sales jump as Heathrow and Amsterdam stores open.
Profits at Tiffany & Co more than quadrupled in the three months to January 31 and shares have doubled in the past year, heralding a return to prosperity for luxury jewellers.
Europe delivered strong results for the luxury brand and retailer with sales up 29 percent to US$122.9 million (£82 million) in the fourth quarter and 10 percent to US$311.8 million (£208.1 million) in the year due to strong growth in most countries. On a constant-exchange-rate basis, sales rose 18 percent in the fourth quarter and 16 percent in the year; while like-for-like sales jumped 14 percent and 9 percent.
Sales in Europe were bolstered by the opening of two new stores during the quarter; a boutique in Amsterdam and a store at London’s Heathrow Airport. Tiffany also reported strong growth in the Far East and the previously weak US market, with its New York flagship reporting a 22 percent increase in sales.
Despite the strong sales results, profit at the group was below analyst expectations at US$140.4 million (£94 million) and full-year sales dropped 5 percent. Tiffany reported lower gross margins, dragged down by increased wholesaling of rough diamonds which generate “minimal, if any profit” for the business.
Expenses rose 7 percent due to a management incentive compensation expense but the business has clawed back some costs by cutting staff numbers through early retirement schemes.
Tiffany chairman and chief executive Michael Kowalski said: “We were very pleased with the sales results in the fourth quarter which reflected growth in most countries, product categories and price points. Notwithstanding the global economic challenges over the past year, the decisive measures we took to control spending were successful and, combined with the considerable and growing international awareness of the Tiffany & Co brand, helped us to generate strong earnings and free cash flow.
"In 2010, we will remain focused on meaningful opportunities to expand our global store base, realise market share gains in a changing competitive environment and enhance profitability. We believe that Tiffany has the ability to deliver healthy sales and earnings growth and, in fact, have begun the year with worldwide sales growth exceeding our first quarter plan which calls for a high-teens percentage increase. Tiffany has the necessary components for ongoing success — compelling products, organisational and financial strength, an efficient infrastructure and a premium brand that is increasingly recognised for lasting value."