Tiffany & Co outstripped quarterly estimates for profit and revenue and raised its full-year earnings forecast as the retailer sold more jewelry in China and the Americas. Second-quarter global net sales rose 12% to $1.1 billion, with comp sales rising 8%, and first half sales net sales increased 13% to $2.1 billion, comp sales rising 9%, reflecting geographically broad-based growth and increases in all product categories.
Net sales in the Americas, which accounts for nearly half of the company’s total sales, 8% to $475 million in the second quarter and 8% to $900 million in the first half; comparable sales rose 8% and 9%, respectively. Sales in Asia Pacific grew 28 percent to $301 million in the second quarter and 28% to $629 million in the first half, which included comparable sales growth of 12% in the second quarter and 13% in the first half. The company mainly attributed the rise in both markets to higher spending by local customers. Tiffany’s shares rose 4.2 percent to $135.15 in premarket trading after the company said it expected full-year earnings per share to be between $4.65 and $4.80, up from $4.50-$4.70.
Reuters writes, "Under Chief Executive Alessandro Bogliolo, Tiffany has been reaping the benefits of a shift in focus to price-conscious younger clientele by selling less expensive fashion jewelry and introducing high-end everyday home items such as $350 gold straws and $1,500 gold paper clips." The CEO said he was pleased with initial customer reactions to their new communication, product and in-store initiatives. The launch of PAPER FLOWERS, a floral collection in platinum and diamonds, is moving toward full global distribution. "Our activities in these areas will further accelerate in the remainder of the year with special focus on product personalization, high jewelry, a whimsical holiday campaign." He also announced the jeweler would be unveiling in North America an, "innovative diamond ring concept” called TIFFANY TRUE.
Reuters adds that, "After years of falling sales, mainly due to intense competition from online players such as Blue Nile, Tiffany has been investing significantly to develop its website and boost its marketing and store presentations." Despite the additional costs generated by those investments, the company’s gross margins rose to 64 percent from 62.5 percent a year earlier.
Management’s guidance for fiscal 2018 includes worldwide net sales increasing by a high-single-digit percentage over the prior year both as reported and on a constant-exchange-rate basis, and they foresee net earnings increasing to a range of $4.65 - $4.80 per diluted share (from a previous range of $4.50 - $4.70 per diluted share). Net earnings and earnings per share in the third quarter are expected to be below the prior year.