(IDEX Online) - Tiffany & Co. reported that worldwide net sales rose 15% which, combined with a higher operating margin and a lower effective tax rate, resulted in a 53% increase in net earnings its financial results for the three months ended April 30.
Based on these strong and better-than-expected results, management revised upward its outlook for the full year ending January 31, 2019 (fiscal 2018). In addition, the Board of Directors approved a new $1 billion share repurchase program.
In the first quarter:
Worldwide net sales increased 15% to $1.0 billion, resulting from broad-based sales growth; comparable sales increased 10%.
Net earnings increased 53% to $142 million, from last year's $93 million.
Alessandro Bogliolo, Chief Executive Officer, said, "We are very pleased with this start to the fiscal year, and we are particularly encouraged by the breadth of sales growth across most regions and all product categories. Most importantly, however, we remain focused on achieving sustainable growth in comparable sales, operating margin and earnings by pursuing and investing in the six strategic priorities we put forward in March: amplifying an evolved brand message; renewing our product offerings and enhancing in-store presentation; delivering an exciting omnichannel customer experience; strengthening our competitive position and leading in key markets; cultivating a more efficient operating model; and inspiring an aligned and agile organization to win.
"In line with the priority of renewing our product offerings, we are excited about the recent unveiling of PAPER FLOWERS, a major collection in platinum and diamonds, ranging from fine to high jewelry. Additions to existing product collections will follow throughout the year.
"Simultaneously, our new campaign, "Believe in Dreams," has debuted across print and digital media. The fresh and whimsical communication, featuring Elle Fanning wearing some of Tiffany's most iconic jewelry, is a further step in the priority of amplifying an evolved brand message. As previously announced, beginning in the second quarter and for the balance of the year, we are stepping up our spending in certain areas because we are committed to reaching the full, long-term and sustainable growth potential of this legendary brand."
Net sales in the first quarter by region were:
In the Americas, total net sales increased 9% to $425 million and comparable sales rose 9%. Sales increased across the region, and management attributed the growth to higher spending by local customers and foreign tourists. On a constant-exchange-rate basis, total sales and comparable sales increased 8% and 9%, respectively.
In Asia-Pacific, total net sales rose 28% to $329 million due to increased retail sales in Greater China and most other markets, as well as higher wholesale sales in Korea; comparable sales rose 14%. Management attributed the growth to higher spending by local customers and foreign tourists. On a constant-exchange-rate basis, total sales and comparable sales increased 23% and 9%, respectively.
In Japan, total net sales rose 17% to $151 million and comparable sales rose 14%. Management attributed growth to higher spending by local customers and foreign tourists. On a constant-exchange-rate basis, total sales and comparable sales were 12% and 9%, respectively, above the prior year.
In Europe, total net sales increased 13% to $107 million, which largely reflected the positive effects from currency translation, as well as new stores; comparable sales rose 2%. On a constant-exchange-rate basis, total sales increased 1%, while comparable sales declined 9% due to softness across much of the region, which management attributed to lower spending by foreign tourists as well as negative effects from new stores on existing store sales.
Other net sales declined 21% to $22 million primarily due to a reduction in wholesale sales of diamonds.
Tiffany opened one company-operated store in the first quarter and closed two. At April 30, the company operated 314 stores (123 in the Americas, 87 in Asia-Pacific, 54 in Japan, 46 in Europe, and four in the UAE), versus 310 stores a year ago (124 in the Americas, 84 in Asia-Pacific, 54 in Japan, 43 in Europe, and five in the UAE).
Fiscal 2018 Outlook:
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.