Tiffany & Co. reported Friday that worldwide first quarter net sales increased 12 percent to $668.1 million, year-over-year.
On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales and same-store sales rose 8 percent and 3 percent, respectively. Tiffany said sales results benefited from strong growth in Asia-Pacific and Europe.
Net earnings from continuing operations rose 20 percent to $64.4 million in the first quarter, which the company said exceeded expectations.
Effective with this first quarter, management has changed segment reporting to reflect operating results for the following regions: the Americas, Asia-Pacific and Europe. Prior year results have been revised to reflect this change. The company has expanded its global reach and management has determined to assess performance on a region-by-region basis, rather than on a channel-of-distribution basis.
First quarter sales by region were as follows:
* Total sales in the Americas region (consisting of sales in the U.S., Canada and Latin/South America) increased 6 percent to $373.6 million, year-over-year, due to incremental sales from new stores. Same-store sales in the U.S. were equal to the prior year, consisting of a 16 percent increase in Tiffany’s New York flagship store (due to increased foreign tourist spending) and a 4 percent decline in branch store sales. Combined catalog and Internet sales in the U.S. increased 1 percent.
* Sales in the Asia-Pacific region (which includes sales in Japan, in Asia-Pacific countries outside Japan, and in the Middle East) increased 21 percent to $222 million. On a constant-exchange-rate basis, sales rose 10 percent and same-store sales increased 4 percent reflecting strong growth in all Asia-Pacific countries other than Japan.
* Sales in Europe increased 38 percent to $60.1 million. On a constant-exchange-rate basis, a 30 percent increase in sales was due to 12 percent same-store sales growth and incremental sales from four new stores.
Tiffany & Co. operates 192 TIFFANY & CO. stores and boutiques (81 in the Americas, 93 in the Asia-Pacific region and 18 in Europe), compared with 171 (74, 83 and 14 in those respective regions) a year ago.
* Other sales declined 21 percent to $12.4 million, due to reduced wholesale sales of diamonds made in connection with the company’s diamond sourcing program.
“We are pleased to start the year with sales and earnings growth above our expectations,” said Michael J. Kowalski, Tiffany chairman and chief executive officer. “A 12 percent increase in worldwide sales, despite only modest growth in the U.S. due to challenging conditions, reflects the benefit of globally-diversified distribution.”
Kowalski said that for the remainder of the year, the company will maintain a cautious outlook for U.S. sales and do not expect an improvement until later this year. “Worldwide sales performance in May-to-date is meeting our expectation which, consistent with the first quarter pattern, reflects strength in markets throughout Asia-Pacific (other than Japan) and Europe more than offsetting softness in U.S. sales. We remain on track to achieve our full year growth expectations. Specifically, we are looking for worldwide net sales growth of approximately 10 percent in 2008.”