Tiffany & Co. today (March 17) reported its financial results for the full year and the three months (fourth quarter) ended January 31, 2017, which were consistent with its previously issued guidance for the 2016 fiscal year. Worldwide net sales declined 3% in the year and rose 1% in the fourth quarter, while in both periods higher gross margins countered growth in operating expenses. Net earnings per diluted share declined 1% in the full year and 2% in the fourth quarter. The company generated more than $700 million of cash flow from operating activities in the full year.
In the full year, worldwide net sales of $4.0 billion were 3% below the prior year, reflecting a 5% decline in comparable store sales. Performance was generally soft across all jewelry categories. On a constant-exchange-rate basis, worldwide net sales and comparable store sales declined 3% and 5%, respectively. In the fourth quarter, worldwide net sales increased 1% to $1.2 billion and comparable store sales were unchanged from the prior year. On a constant-exchange-rate basis, worldwide net sales rose 2% and comparable store sales were unchanged from the prior year.
Michael J. Kowalski, Chairman of the Board and Interim Chief Executive Officer, said, "Despite macroeconomic and geopolitical challenges in the past year that we believe will continue in 2017, we strongly believe that Tiffany's strategies are sound and that we have meaningful growth opportunities. Our management team is focused on accelerating the execution of our strategies to deliver extraordinary products, communications and experiences that will delight our customers around the world. Through strong leadership and this accelerated execution, we believe we are well-positioned to deliver attractive total shareholder return over the long-term."
Total sales in the Americas declined 5% to $1.8 billion in the full year and 3% in the fourth quarter to $587 million, and comparable store sales declined 6% and 2%, respectively. The company attributed the results in the full year to lower spending by U.S. customers and foreign tourists. In addition, sales in Tiffany's New York flagship store declined 11% in the full year and 7% in the fourth quarter, and represented less than 10% of worldwide net sales in both periods. In Europe, total sales fell 10% to $458 million in the full year and 7% to $146 million in the fourth quarter, while comparable store sales declined 14% and 9%, respectively. Constant-exchange-rate sales growth in the United Kingdom was largely attributed to higher foreign tourist spending in the second half of the year. "Other" sales of $99 million in the full year and $28 million in the fourth quarter were 8% and 12%, respectively, below the prior year. Comparable store sales declined 15% in the full year and 3% in the fourth quarter, due to lower retail sales in the United Arab Emirates.
Rising, flat sales
In Japan, total sales rose 12% to $604 million in the full year and 15% to $185 million in the fourth quarter; comparable store sales increased 16% and 19%, respectively, while wholesale sales declined in both periods. They attributed sales growth in both periods to higher spending by local customers, with declines in spending by Chinese tourists. In the Asia-Pacific region, total sales of $1 billion in the full year were approximately equal to the prior year and total sales of $284 million in the fourth quarter were 9% above the prior year, benefitting from the opening of new stores, with comparable store sales declining 9% and 2%, respectively. During the year, Tiffany's attributed performance in this region to increased purchasing by local customers and declines in spending by foreign tourists. In addition, there was strong retail sales growth in China, increased wholesale sales in Korea, a decelerating rate of retail sales decline in Hong Kong and varying performance in other countries.
Looking forward to 2017, Tiffany's anticipates worldwide net sales increasing over the prior year by a low-single-digit percentage and by a mid-single-digit percentage on a constant-exchange-rate basis, and net earnings per diluted share increasing by a high-single-digit percentage over 2016's earnings per diluted share of $3.55 and by a mid-single-digit-percentage over 2016's earnings per diluted share (excluding charges) of $3.75
Image: Tiffany & Co.