Tiffany & Co.
first-quarter earnings jumped 12% from a year ago as America's renascent love affair with expensive baubles broadened. The jeweler will struggle to hit full-year targets, however, due to ongoing weakness in Japan.
Tiffany earned $40.3 million, or 27 cents a share, in the quarter ended April 30, compared with earnings of $35.9 million, or 24 cents a share, a year ago. Sales rose 15% to $457 million, thanks mainly to a 20% jump in U.S. same-store sales.
Analysts were forecasting earnings of 27 cents a share on sales of $453 million in the quarter. Tiffany also said full-year earnings should rise 12% from the previous year on an 11% jump in sales. The guidance comes out to earnings of about $1.62 a share on sales of $2.22 billion. The Thomson First Call consensus was for earnings of $1.66 a share on sales of $2.24 billion.
Currency translation boosted the sales increase in the just-completed quarter. Stripping out the impact, overall sales rose 11% on a 9% jump in same-store sales. In the U.S., retail sales jumped 23% to $213.6 million, reflecting a 30% jump at its New York flagship store and 17% same-store growth at U.S. branches. The company cited brisk sales to U.S. residents and foreign tourists alike.
International sales rose 12% to $184.7 million in the first quarter. On a constant exchange-rate basis, overall international sales rose 2%, while international same-store sales fell 2%. In Japan, where Tiffany has been struggling, same-store sales in constant currency fell 10%.
"We are pleased to be sustaining that strength in the U.S. and most international markets," Tiffany said. "Japan is the one notable exception due to continued weakness in the silver-jewelry category. We believe that conditions in most of Tiffany's markets are favorable to support continued healthy rates of sales and earnings growth, supported by our ongoing initiatives in merchandising and marketing.
"Although Japan's results were disappointing, we have focused on product assortment repositioning and new product introductions and believe that incremental marketing initiatives will enhance overall customer awareness and lead to gradually improving sales and profitability," it said.