Tiffany & Co. said on Wednesday net sales for the holiday period (Nov. 1to Dec. 31) increased 15 percent to more than $818 million due to strong growth in the U.S. and most international markets. 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 increased 7 percent.
Sales by channel of distribution are as follows:
* U.S. retail sales increased 12 percent to $432.4 million. Same-store sales rose 8 percent, due to sales growth of 15 percent in Tiffany’s New York flagship store and 7 percent in comparable branch stores, resulting from increases both in the number of transactions and in the average amount spent per transaction, the New York-based luxury retailer said. Five new U.S. stores opened in 2006 also meaningfully contributed to sales growth.
* International retail sales increased 18 percent to $283.5 million. On a constant-exchange-rate basis, sales rose 14 percent and comparable store sales rose 6 percent. Strong sales growth was achieved in most international markets, which more than offset a same-store sales decline in Japan, the company said.
* Direct Marketing sales rose 10 percent to $69.7 million, due to increases in both the number of orders and in the amounts spent per order.
* Other sales rose 51 percent to $32.3 million. The increase was largely due to increased wholesale sales of diamonds, as well as increased specialty retail sales in IRIDESSE and LITTLE SWITZERLAND stores.
“We are delighted to report such strong overall sales growth for the holiday season which exceeded our expectations,” said Michael J. Kowalski, Tiffany chairman and chief executive officer. “We saw healthy sales increases in many product categories ranging from diamonds to silver jewelry. Based on these results and no meaningful change in sales or margin trends in the rest of the fiscal year ending Jan. 31, our full year expectation calls for 11-12 percent growth in earnings before income taxes.”
He added, “Based on the success of new stores and numerous opportunities, our plans for 2007 include accelerating the pace of TIFFANY & CO. store openings to 5-7 in the U.S. and 10 internationally. We will also introduce a wide range of new products. We are still engaged in our financial planning, but our preliminary expectation for 2007 calls for low-double-digit net sales growth and approximately 13-15% growth in earnings per diluted share. We will elaborate further when we report our full year 2006 results.”
In a related manner, Tiffany is on the front page of the Wednesday Wall Street Journal. The story dealt with a gamble the company took when it learned that its lower-cost silver jewelry line was popular with teenagers.
Silver jewelry sales “exploded” between 1997 and 2002, the newspaper reports. However, the company was concerned that it may lose its luxury brand status, so in 2002 the company started raising the price of its silver jewelry. Between 2001 and 2003 the price of its silver charm bracelets and necklaces (the most popular items with the teens) rose more than 30 percent.
At the same time, according to the story, the company introduced more expensive jewelry collections, renovated its stores, and showcased its craftsmanship with by highlighting spectacular gems.