Jewellery group notes particular strength in yellow diamonds.
Tiffany & Co. has today released its financial results for the third quarter ending October 31, with European sales increasing 7% to $104 million (£64.3m).
European sales in the first nine months of the year also improved, climbing 8% to $309 million (£191m). On a constant-exchange-rate basis, total sales increased 4% in the quarter and 7% in the year-to-date, with comparable store sales growth of 2% and 5%, led by sales growth in the UK.
The company reported a 50% increase in total net earnings in Q3, largely resulting from 7% growth in worldwide net sales and a higher operating margin. The improved earnings growth in the quarter has also led management to increase its full-year forecast.
Tiffany chairman and chief executive officer Michael J. Kowalski said: "We are very pleased with our overall results. Worldwide sales growth in the quarter demonstrated the growing power of the Tiffany & Co. brand and the benefits of our expanding global presence.
"Operating earnings rose faster than sales, reflecting favourable product cost trends and ongoing well-controlled expenses. We’re experiencing excellent customer response to our expanded fashion jewellery designs, highlighted by the Atlas collection, as well as continued growth in our fine and statement jewellery, with particular strength in our yellow diamond collection."
In the three months to October 31, Tiffany’s worldwide net sales increased 7% to $911 million (£563m). On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into US dollars, worldwide net sales rose 11%, and comparable store sales rose 7% due to growth in all regions.
The company’s net earnings rose 50% to $95 million (£58.7m), or $0.73 per diluted share, compared with $63 million, or $0.49 per diluted share, a year ago.
In the nine months to October 31 the company reported a 7% increase in worldwide net sales to $2.7 billion (£1.67bn). On a constant-exchange-rate basis, worldwide net sales increased 11% and comparable store sales rose 7% due to increases in all regions.
Its net earnings for the first nine months increased 20% to $285 million (£176m), or $2.21 per diluted share, versus $237 million (£146.5m), or $1.85 per diluted share, a year ago.
Tiffany sales by region
Tiffany’s total sales in the Americas region increased 4% to $417 million (£258m) in the third quarter and 4% to $1.3 billion (£803m) in the year-to-date. On a constant-exchange-rate basis, total sales in the Americas increased 5% in the quarter and 4% in the year-to-date, and comparable store sales rose 1% in both the quarter and year-to-date due to growth in Tiffany’s New York flagship store sales.
In the Asia-Pacific region, total sales increased 27% to $238 million (£147m) in the third quarter and 20% to $670 million (£414m) in the year-to-date. On a constant-exchange-rate basis, total sales increased 29% and 21% in the respective periods, and comparable store sales rose 22% and 15% due to strong sales growth throughout the region.
Tiffany reports that its business in Japan continues to perform well, however a negative translation effect from a substantially weaker yen versus the US dollar caused total sales to decline 13% in the third quarter and 8% in the year-to-date. However, on a constant-exchange-rate basis, total sales rose 9% in the quarter and 12% in the year-to-date, primarily due to comparable store sales growth of 5% and 11%.
The company opened six stores in the quarter, located in Paramus, New Jersey, Cleveland, Ohio, West Edmonton, Canada and Curitiba, Brazil. In Europe it opened a new store in Stuttgart, Germany; and in China a new store was unveiled in Jinan.
As of October 31 2013, Tiffany operated 283 stores globally – 120 in the Americas, 68 in Asia-Pacific, 54 in Japan, 36 in Europe and five in the U.A.E. – versus 272 stores a year ago.
Tiffany outlook for 2013
For the fiscal year ending January 31 2014, Tiffany & Co. management is forecasting net earnings in a range of $3.65-$3.75 per diluted share, compared with $3.50-$3.60 per diluted share in its previous outlook and $3.25 per diluted share in 2012.
This forecast excludes $0.05 per diluted share of expenses tied to specific cost-reduction initiatives that were recorded in the first quarter. This forecast is based on a number of assumptions, which Tiffany says are approximate and may or may not prove valid, including worldwide net sales increasing by a mid-single-digit percentage in US dollars, and the addition of a net 14 company-operated stores, notably six in the Americas, seven in Asia-Pacific and three in Europe, and closing one each in Asia-Pacific and Japan.
Tiffany expects to report its November to December holiday sales results on January 10.