Tiffany & Co has reported its Q1 financial results for the three months ended April 30 2016, citing worldwide net sales declined by 7% compared to the same period last year.
Worldwide net sales declined to $891 million and comparable store sales declined by 9%.
The report shows declines in all regions except Japan. In Europe, total sales of $97 million were 9% lower than the prior year and comparable store sales declined 15%. On a constant-exchange-rate basis total sales and comparable store sales declined 7% and 14%, respectively, due to softness in most countries, led by France, that management attributed largely to lower foreign tourist spending.
Elsewhere the Americas and the Asia-Pacific region were down 9% and 8% respectively. Japan sales increased by 8% compared to the prior year.
Net earnings of $87 million were also lower than the prior year resulting from a decline in the operating margin, as improved gross margin was more than offset by a lack of sales leverage on operating expenses. However, net earnings were generally in line with management’s previously announced expectation for the first quarter.
Elsewhere, gross margin increased to 61.2% in the first quarter, from 59.1% a year ago. The increase was due to favorable product input costs and the effect of a shift in sales mix towards higher-margin products, as well as price increases, partly offset by the effect of currency translation and a lack of sales leverage on fixed costs.
Tiffany & Co chief executive officer, Frederic Cumenal, comments: “As expected, this was a difficult quarter in terms of both sales and earnings growth. We faced numerous challenges, including continued pressure from foreign tourist spending in Europe, the U.S. and Asia, particularly in Hong Kong. However, we are continuing to take actions that are intended to strengthen sales growth with local customers in the U.S. and around the world.”
He continues: “From a strategic perspective, we believe that our initiatives will enhance our ability to provide our customers with extraordinary products and experiences and ultimately contribute to improved financial results. We remain focused on generating sustainable long-term sales and earnings growth.”