Tiffany reports Wednesday that net sales increased 10 percent to $547.8 million due to growth in the U.S. and most international markets. Net earnings for the period rose 23 percent to $29.1 million for the luxury jewelry retailer.
On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales for the third quarter, ended Oct. 31, rose 10 percent and worldwide comparable store sales rose 4 percent.
In the nine-month (year-to-date) period ended Oct. 31, net sales rose 8 percent to $1.6 billion. On a constant-exchange-rate basis, net sales increased 9 percent and worldwide comparable store sales rose 5 percent.
Net earnings of $113.4 million in the year-to-date were 1 percent below the prior year.
Sales by channel of distribution are as follows:
* U.S. retail sales increased 9 percent to $270 million in the third quarter and same-store sales rose 6 percent (sales rose 13 percent in the New York flagship store and 4 percent in comparable branch stores). In the year-to-date, U.S. retail sales increased 6 percent to $819.5 million and comparable store sales rose 3 percent (sales rose 4 percent in the New York flagship store and 3 percent in comparable branch stores). Comparable store sales growth in both periods was due to higher spending per transaction.
* International retail sales rose 9 percent to $221.6 million in the third quarter and 11 percent to $600 million in the year-to-date. On a constant-exchange-rate basis, sales increased 9 percent in the quarter and 14 percent in the year-to-date, and same-store sales rose 4 percent and 10 percent, respectively, as strong growth in many international markets more than compensated for weaker results in Japan.
* Direct Marketing sales increased 11 percent to $30.3 million in the third quarter and 11 percent to $96 million in the year-to-date. Sales growth was generated by increases in the number of orders and in the amounts spent per order.
* Other sales rose 23% to $25,424,000 in the third quarter and 5% to $86.4 million in the year-to-date. The majority of the third quarter increase resulted from increased wholesale sales of diamonds. In addition, LITTLE SWITZERLAND sales rose 9 percent and 4 percent, respectively, which continued to be below the company’s expectations. The opening of new IRIDESSE stores also contributed to growth.
Gross margin (gross profit as a percentage of net sales) in the third quarter was 53.6 percent versus 54.1 percent a year ago and in the year-to-date was 54.8 percent versus 54.5% a year ago. The decrease in the quarter was due to wholesale sales of diamonds and higher product costs, partly offset by sales leverage on fixed costs.
“We are pleased with these overall results,” said Michael J. Kowalski, Tiffany chairman and chief executive officer. “We are now almost one-month into the November-December holiday period and have seen net sales growth higher than we expected. Comparable store sales growth in the U.S. is currently exceeding our high-single-digit expectation and international comp store sales growth is exceeding our mid-single digit expectation. It’s a good start to the season, but the vast majority of holiday business is still ahead of us.”
For the full year, Kowalski said the company is anticipating net sales growth of approximately 10 percent.
“Customers are enthusiastic about the new stores we have opened this year and the extraordinary products we have introduced,” he said. “We believe Tiffany & Co. is well-positioned.”
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