RAPAPORT... Tiffany & Co said sales declined 2 percent to $938.2
million in the third quarter that ended October 31, with the strong U.S. dollar
hampering reported revenue figures. In the nine months to October, sales
decreased 2 percent to $2.9 billion and profit narrowed 4 percent to $288
million.
On a constant-currency basis, sales rose 4 percent.
Comparable-store sales increased 1 percent due to growth in Japan and Asia
Pacific but the performance was offset by lower sales in the Americas, the U.S.
jewelry retailer said. Profit more than doubled to $91 million and net earnings
per diluted share grew at a similar rate to $0.70.
The company has revised its full-year net earnings estimate
for 2015 downward and now expects the figure to decrease by 5 to 10 percent
from last year’s $4.20 per diluted share. In May 2015 it predicted minimal
growth in net earnings.
On a reported basis, sales fell 7 percent in the Americas, 2
percent in Asia Pacific and 2 percent in Europe, but grew 17 percent in
Japan.Taking into account currency
changes, Americas sales dropped 5 percent and revenue in other key regions
increased: Japan by 34 percent, Europe by 9 percent and Asia Pacific by 6
percent, according to a statement November 24.
The U.S. dollar strengthened during the quarter against 25
of the world’s 31 major currencies. The Japanese yen led the outliers that
appreciated versus the greenback in the period.
In terms of comparable-store sales, Japan rose 9 percent, or
24 percent on a constant exchange-rate basis. The Americas also dropped 9
percent, or 6 percent on a constant exchange-rate basis. Asia-Pacific sales
fell 5 percent, or a 2-percent rise taking into account currency fluctuations.
Europe sales slipped 5 percent but increased 6 percent in local currency.
The strongest sales growth was in fashion gold jewelry and
statement jewelry, Tiffany said.
Gross margin rose 1 percentage point to 60 percent, benefiting from
favorable product input costs and price increases partly necessitated by the
strong U.S. dollar. The improvement was partially offset by a shift in sales
mix to higher-priced, relatively lower-margin products, and higher wholesale
sales of diamonds, according to the group.
“As expected, the
strong U.S. dollar continued to put pressure on our financial results,
specifically from the translation of non-U.S. sales into dollars and on foreign
tourist spending in the U.S,” chief executive officer Frederic Cumenal said in
the statement. “In addition, we believe that volatile, uncertain economic and
market conditions in the U.S. and other regions are affecting consumer
spending, causing us to maintain a cautious near-term outlook.”
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