Tiffany & Co. reported that its first quarter revenue rose 7.6 percent year on year to $819.2 million for the period that ended on April 30, 2012. Same-store sales worldwide rose 4 percent. Cost of sales jumped 10 percent to $350.2 million and gross margin as a percentage of sales fell to 57.3 percent from 58.3 percent one year ago. Profit was flat at $81.5 million or 64 cents per share.
While sales were only 3 percent higher in the Americas at $386 million, Tiffany & Co. reported a solid 16 percent increase --at a constant exchange rate-- for sales in the Asia-Pacific region at $195 million, and a 13 percent jump in revenue for Japan at $142 million. Sales across Europe rose 7 percent as measured by local currency to $88 million. Same-store sales at a constant exchange-rate in the Americas fell 1 percent and in Europe they dropped 4 percent from one year ago, however, comparable-store sales rose 10 percent for Asia-Pacific and 12 percent for Japan.
Michael J. Kowalski, the chairman of Tiffany & Co., said, "In terms of our sales for the first quarter, regions outside the Americas performed generally as expected. However, the Americas region underperformed, continuing a soft trend that began in the last quarter of 2011 and compounded by the difficult comparison to substantial sales growth in last year's first quarter. These sales results led to net earnings modestly trailing our expectations."
Tiffany's net inventory increased 27 percent year on year to $2.2 billion in the quarter. Finished goods inventories increased 16 percent due to higher product acquisition costs, expanded product assortments and new store openings, as well as some effect from weaker sales growth. Tiffany stated that a 44 percent increase in raw material and work-in-process inventories reflected higher product acquisition costs, expanded rough diamond sourcing and internal manufacturing.
Cash and equivalents and short-term investments totaled $343 million compared with $622 million one year ago. Short-term and long-term debt totaled $834 million on April 30, which was up from $687 million in 2011.
Kowalski added that Tiffany was updating its forecast for the full year to reflect the first quarter results along with lower near-term expectations. ''Although we are very early into the second quarter, worldwide sales are currently increasing by a low-single-digit percentage, reflecting difficult year-over-year comparisons and decelerating rates of economic growth in many countries. In 2011, we achieved extremely strong sales growth in the second and third quarters, especially in the Americas and Asia-Pacific regions."