Tiffany & Co. (NYSE-TIF) reported that net sales in the holiday period from November 1 – December 31 increased 8% over the prior year to $509 million.
On a constant-exchange-rate basis that excludes the effect of translating local-currency-denominated sales into U.S. dollars, net sales rose 6% and comparable worldwide store sales declined 1%. Sales increased in each channel of distribution. Results are based on unaudited sales.
“We believe that these holiday season results, which were below our expectations, reflect the same consumer sentiments that are adversely affecting other retailers in U.S. and international markets,” says Michael J. Kowalski, president and chief executive officer.
Specified sales results from the preliminary report are as follows:
* U.S. Retail sales increased 3% to $257.2 million. Comparable store sales rose 1%, comprised of a 6% increase in November and a 1% decline in December. Comparable store sales resulted from an increase in the number of transactions offset by a decline in the average dollars spent per transaction. Sales at Tiffany’s New York flagship store were equal to the prior year and comparable branch store sales rose 1%.
* International Retail sales rose 6% to $184 million. On a constant-exchange-rate basis, International Retail sales rose 2%; on that basis, comparable store sales declined 10% in Japan, increased 9% in other Asia-Pacific markets, increased 11% in Europe and rose in Canada and Latin America.
* Direct Marketing sales increased 11% to $56, million. Combined Internet/catalog sales rose 20% due to strong e-commerce sales. Business sales declined 3%.
* Specialty Retail sales were $11 million, primarily reflecting the consolidated net sales of Little Switzerland, Inc. stores which the Company acquired in October 2002.
Mr. Kowalski says, “Based on an assumption of generally similar trends in January, we should expect net sales in the fourth quarter to increase 8-10% over the prior year. Combined with an expected lower gross margin and an increased expense ratio, we now expect net earnings in a range of 57-62 cents per diluted share in the fourth quarter ending January 31. (compared with our previous expectation of 60-65 cents). This would result in full year earnings of $1.25-$1.30 per diluted share, compared with $1.15 per diluted share in 2001.”
He adds, “From an external perspective, we are dealing with uncertain times, but the appeal of Tiffany’s extraordinary products remains strong. We are still in the planning process for 2003, but our preliminary thoughts call for increases of 8-12% in both net sales and net earnings (excluding the effect of a non-recurring tax benefit in the third quarter of 2002) for the year. That assumes weaker first half results with growth accelerating as the year progresses. Strategically, we fully intend to use our strong financial position to maintain our normal, selective rate of expansion in distribution and new product offerings, which ultimately strengthen Tiffany’s potential to achieve sustainable, longer-term growth.
The company plans to report fourth quarter and full year results on Feb. 26.