Tiffany & Co. said Monday that net sales in the fiscal year, ended Jan. 31, rose 11 percent, due to geographically broad-based growth in the U.S. and international markets. Earnings from operations rose 9 percent for the year.
In the fourth quarter, ended Jan. 31, net sales increased 15 percent to $986.35 million. On a constant-exchange-rate basis which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales rose 14 percent and worldwide same-store sales rose 8 percent.
Net earnings of $140.5 million in the fourth quarter were approximately equal to 2005, the luxury jeweler said.
In fiscal 2006, net sales rose 11 percent to $2.6 billion. On a constant-exchange-rate basis net sales increased 11 percent and worldwide comparable store sales rose 6 percent.
Net earnings of $253.9 million in fiscal 2006 were approximately equal to 2005.
“Tiffany continued to pursue important strategic initiatives in 2006 and achieved the earnings per share expectation we set at the start of the year,” said Michael J. Kowalski, Tiffany chairman and chief executive officer. “We were especially encouraged with customers’ response to our new stores and to the wide range of new products we introduced in 2006.”
Sales by channel of distribution are as follows:
* U.S. Retail sales increased 13 percent to $506.9 million in the fourth quarter and 9 percent to $1.3 billion for the year, the company said. Sales benefited from increased spending per transaction and an increase in total store transactions. Same-store sales increased 9 percent in the fourth quarter and 5 percent for the year due to increases of 17 percent and 9 percent in the New York flagship store and 8 percent and 4 percent in comparable branch stores. In addition, the five new U.S. stores opened in 2006 meaningfully contributed to sales growth.
* International Retail sales increased 15 percent to $350.6 million in the fourth quarter and 12 percent to just over $1 billion for the year. On a constant-exchange-rate basis, sales increased 12 percent in the quarter and 13% for the year. Same-store sales increased 6 percent and 8 percent, respectively. In both the quarter and the year, strong sales growth in most international markets more than offset weaker results in Japan.
At the end of fiscal 2006, Tiffany operated 167 Tiffany & Co. stores and boutiques (an 8 percent increase from 154 at the prior year-end), which included 64 stores in the U.S. and 103 international locations.
* Direct Marketing sales increased 10 percent to more than $78 million in the fourth quarter and 11 percent to more than $174 million in the year due to strong growth in Internet sales. Direct Marketing sales growth came from increases in the number of orders and in the amounts spent per order.
* Other sales rose 48 percent to $50.7 million in the fourth quarter and 18 percent to $137.2 million for the fiscal year. In both periods, the increases were largely due to wholesale sales of diamonds. Specialty retail sales also increased: sales in Little Switzerland stores (which represent the largest portion of other sales) rose 11 percent in the quarter and 6 percent for the year, while sales increases in Iridesse stores resulted from a doubling of locations in 2006, as well as from comparable store sales growth.
“We concluded 2006 with strong sales growth, giving us every reason to believe that Tiffany remains well-positioned to achieve solid sales and earnings growth in 2007 and beyond,” Kowalski said. “Our objectives for 2007 include: net sales growth of 11-12 percent; a high-single-digit percentage increase in U.S. and international comparable store sales (on a constant-exchange-rate basis); accelerating the pace of new store openings – we expect to add 17 company-operated Tiffany & Co. stores and boutiques in 2007, a 10 percent increase.”
He added, “We are now almost two months into the first quarter, and note that total worldwide net sales are tracking slightly above our growth expectations; at the same time, we are seeing a greater-than-expected shift in sales mix toward higher-end, lower-margin diamond jewelry. Given all that, we believe that earnings are currently on-track to achieve our expectation for the first quarter.”
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