Tiffany’s third quarter figures exceed expectations

Posted November 30, 2010 | By Sonia Nair

Tiffany & Co increased its worldwide net sales to $681.7 million in its third quarter, a 14 per cent increase from the same period last year.

In the three months ending October 31, Tiffany also managed to increase gross margin by 3.7 per cent. The rise was attributed to retail price increases, improvement in manufacturing processes and sales leverage on fixed costs.

The sales increase and higher operating margin contributed to a higher than expected 27 per cent increase in net earnings to $55.1 million.

Michael J Kowalski, chairman and chief executive of Tiffany & Co, said, “As third-quarter results demonstrate once again, Tiffany’s expanding, globally diversified store provides a significant platform to generate sustainable sales and earnings growth.”

Although growth occurred in all geographic regions, total sales in Asia Pacific increased by the largest margin, up 24 per cent to $127.1 million from the same period last year while same-store sales climbed 15 per cent.

In comparison, total sales in the third quarter increased by 9 per cent in the Americas and 22 per cent in Europe.

Tiffany & Co has opened six Tiffany stores in the year to date, as part of plans to open a total of 14 locations by the end of the year.

As of October 31, Tiffany operated 93 stores in the Americas, 56 in Japan, 49 in Asia Pacific and 27 in Europe – store growth since October last year had been most substantial in Asia Pacific, where six new stores have opened.

Kowalski said, “We are quite pleased with the performance of new stores and recent product introductions including the yellow diamonds and leather goods collection.”

Tiffany figures showed that there was an increase in wholesale sales of finished goods to independent distributors within emerging markets, as well as an increase in sales of rough diamonds.

Tiffany is optimistic in its outlook for the fiscal year ending January 31, 2011. It projected a worldwide sales increase of 12 per cent, an increase in the mid-twenties percentile for Asia Pacific’s total sales and an increase in its global operating margin.

Between now and the end of the fiscal year, Kowalski forecast a booming Christmas trading season.

“We are now a few weeks into the all-important, two-month holiday season and sales growth is exceeding our expectations, although the majority of the holiday season is certainly still ahead of us.”

Kowalski said the higher than expected third quarter earnings was likely to lead to favourable gross margins and an increase in annual net earnings for Tiffany & Co.

Accessible luxury
In a recent interview for Jeweller’s 2010 State of the Industry report, Michael Hill chief executive Mike Parsell said Tiffany stores were more accessible in America compared with Australia.

“Tiffany & Co in America is very strongly positioned at the top end of business but they are accessible because they have malls on the high street. People look to them aspirationally for design ideas and particularly as bridal products.”

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