Tiffany & Co. on Wednesday reported increases of 8 percent in net sales and 37 percent in net earnings for its third quarter, saying it benefited from a 5 percent rise in worldwide comparable store sales, a higher gross margin, and a lower effective tax rate.
Net sales in the three-month period ended Oct. 31 reached $500.1 million versus $461.1 million in the prior year. Net sales for the first nine months rose 10% to $1.5 billion, compared with $1.4 billion a year ago. On a constant-exchange-rate basis that excludes currency effects from translating foreign-denominated sales into U.S. dollars, net sales increased 9 percent in the third quarter and 10 percent in the nine-month period, with worldwide comparable store sales increasing 5 percent and 4 percent.
Net earnings for the quarter reached $23.8 million versus $17.3 million in the prior year. For the nine-month period, net earnings increased 31 percent to $114.4 million compared with $87.2 million.
U.S. retail sales increased 9 percent to $247.8 million in the third quarter; comparable store sales rose 7 percent, due to growth of 12 percent in New York flagship store sales and 6 percent in branch store sales. In the nine-month period, U.S. Retail sales rose 10 percent to $771.3 million; comparable store sales rose 8 percent with equivalent growth in both the New York store and branch stores. Tiffany opened a store in San Antonio, Texas in the quarter and operated 57 TIFFANY & CO. stores in the U.S. at the end of the quarter.
International retail sales rose 7 percent to $204.3 million in the third quarter and 7 percent to $597 million in the nine-month period. On a constant-exchange-rate basis, sales rose 7 percent in the third quarter and 6 percent in the nine-month period and comparable store sales increased 1 percent in the quarter and declined 1 percent in the nine-month period. On that same basis, comparable store sales in Japan in the quarter declined 3 percent in the nine-month period; increased 4 percent and 5 percent in the Asia-Pacific region outside Japan; and declined 1 percent and rose 1 percent in Europe. Total retail sales in Japan rose 5 percent in the third quarter and 2 percent in the nine-month period, which reflects the opening of two retail locations in the quarter (Yokohama and Osaka) and the closing of five older locations this year.
Direct marketing sales increased 4 percent to $27.3 million in the third quarter and 7 percent to $86.6 million in the nine-month period due to increased average amounts spent for Internet and catalog orders.
Other sales increased 22 percent to $20.7 million in the third quarter and 43 percent to $82 million in the nine-month period. More than half of the increase was due to wholesale sales of diamonds. In addition, sales increased 10 percent and 12 percent in the company’s LITTLE SWITZERLAND stores. The Company’s IRIDESSE stores, which began operations in late-2004 and which focus on the pearl jewelry, added to the sales growth.
“We were pleased to see continued comparable store sales strength in the U.S. and progress in Japan. Tiffany’s extraordinary product offerings, including new jewelry designs which complement our core designs, ensure that we are competitively well-positioned,” said Michael J. Kowalski, Tiffany’s chairman and CEO.