Tiffany & Co. (TIF) Q2 2012 Earnings Call August 27, 2012 8:30 am ET Executives Mark L. Aaron - Vice President of Investor Relations Patrick F. McGuiness - Chief Financial officer and Senior Vice President Presentation Operator
Let's now look at second quarter sales by region. In the Americas, total sales declined 1% in the quarter. An increase in the average price per unit sold was offset by a decline in unit volume. On a constant-exchange-rate basis, total sales were equal to the prior year, and comp store sales were down 5% on top of a 23% comp increase last year. Of that 5% comp decline in the quarter, brand store comps were down 4% on top of a 19% increase last year, with most regions performing in a relatively narrow band except for solid growth in Florida, Texas and our Pacific market of Hawaii and Guam. Sales in the New York flagship store declined 9% on top of a staggering 41% increase last year. Data published by MasterCard Spendingpulse continues to indicate weak customer spending for the entire U.S. jewelry industry and most pronounced among the high-tier jewelers.From a customer mix perspective, the sales decline in the U.S. in the quarter was entirely due to lower spending by local customers. While overall sales to foreign tourists were roughly unchanged from the prior year, higher sales to Japanese and Chinese visitors were offset by a decline in spending by European tourists in the U.S., which obviously affected the New York flagship store as well. Also in the Americas region, total sales rose in Canada, although comps declined, while we had strong growth in local currency comps in Latin America. Beyond stores, combined e-commerce and catalog sales in the Americas rose 3% in the quarter due to an increase in the average sales per order. That was on top of a 16% increase last year. I'm pleased to add that based on successful results measured both quantitatively and creatively from a test mailing of a new catalog format we did earlier this year, our catalogs will soon have a fresh new look starting with the upcoming holiday season.
During the quarter, we added one store in the Americas when we opened our ninth store in Mexico in the Altavista neighborhood of Mexico City. In the second half of the year, we will be adding 3 stores in the U.S., 1 in Brazil and 5 in Canada, which now includes converting from wholesale distribution 4 Tiffany boutiques in Holt Renfrew department stores into company-operated locations.Turning to the Asia Pacific region, total sales rose 1% in the second quarter, resulting from increased unit volume with an offsetting decline in the average price per unit sold. On a constant-exchange-rate basis, total sales increased 3%, and comp store sales in local currencies declined 5%, which compared with an extraordinary 41% comp increase in last year's second quarter. Australia posted the strongest growth in the quarter in contrast to softness in Hong Kong tied to restrained Chinese consumer spending and softness in Korea. We remain enthusiastic about Tiffany's longer-term potential in China, and we continued to expand our store base in the second quarter by opening our 18th and 19th stores there, one in Nanjing and the other in Shanghai's Grand Gateway mall, which represents our fifth store in that city. We have 5 additional stores on track to open in the Asia Pacific region in the second half of the year. Read the rest of this transcript for free on seekingalpha.com