Tiffany & Co.’s sales climbed during its third quarter, but profits for the period fell a steep 30 percent.
For the third quarter (ended Oct. 31), the company’s worldwide net sales increased 4 percent to $853 million, and comparable store sales increased 1 percent. Net earnings declined 30 percent to $63 million, from $90 million in the same period last year.
“Net earnings were below our expectations,” said CEO Michael Kowalski in a statement. “Gross margin was weaker than we expected, and Tiffany’s effective tax rate was higher than we expected.”
In a conference call following the results’ release, vice president Mark Aaron noted that while sales in the Americas rose 3 percent, sales of silver jewelry at price points below $500 dropped. Hurricane Sandy caused 24 of its stores to temporarily close.
But the company said that its Yellow Diamonds collection and 1837 collection with the new RUBEDO metal were both doing well, and its Enchant Jewelry collection had a “good launch.”
In its 10Q, Tiffany added that it still has not come to terms with Elsa Peretti, the legendary Italian designer whose products comprise 10 percent of Tiffany’s sales.
“If Tiffany ceases to have an exclusive license to use the Peretti Intellectual Property, [Tiffany’s] operating results may be adversely affected,” it added
Other highlights of the Tiffany’s balance sheet for the third quarter of 2012 (ended Oct. 31):
- Sales in the Americas region: Up 3 percent to $400 million
- Comp sales at New York flagship: Up 2 percent
- Internet and catalog sales in Americas region: Up 3 percent
- Asia-Pacific region sales: Up 2 percent to $188 million
- Gross margins: 54.4 percent