RAPAPORT... Tiffany & Co. reported that revenue increased 6.9 percent year on year to $911.5 million for the third quarter that ended on October 31. Same-store sales rose 7 percent. Cost of sales edged up 0.9 percent to $392 million and profit surged 49.7 percent to $94.6 million. Inventory increased 8.3 percent year on year to $2.42 billion.
By region, sales improved 4 percent year on year to $417 million in the Americas, with comparable-store sales up 1 percent, while revenue surged 27 percent to $238 million across the Asia-Pacific region and same-store sales jumped 22 percent. Tiffany’s business in Japan was affected by a negative translation effect from a substantially weaker yen, so revenue fell 13 percent to $128 million; however, comparable-store sales rose 5 percent.
In Europe, Tiffany & Co.'s revenue increased 7 percent $104 million and same-store sales rose 2 percent, primarily led by growth in the U.K.
Gross margin increased 2.6 points to 57 percent from 54.4 percent one year ago largely the result of reduced product cost pressure, as well as price increases that Tiffany & Co. implemented in early 2013. The jeweler also observed a shift in the sales mix toward higher-priced, lower gross margin products has continued to offset a portion of these benefits.
Tiffany & Co.'s guidance for the fourth quarter suggested mid-single digit sales improvement in U.S. currency, with earnings increasing by 10 percent to 20 percent.
Michael J. Kowalski, the CEO of Tiffany & Co., said, “We are very pleased with our overall results. Worldwide sales growth in the quarter demonstrated the growing power of the Tiffany & Co. brand and the benefits of our expanding global presence. Operating earnings rose faster than sales, reflecting favorable product cost trends and ongoing well-controlled expenses. We’re experiencing excellent customer response to our expanded fashion jewelry designs, highlighted by the ATLAS collection, as well as continued growth in our fine and statement jewelry, with particular strength in our yellow diamond collection.”