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RAPAPORT... Tiffany & Co. reported that revenue rose 7.2 percent year on year to $992.93 million in the second fiscal quarter that ended on July 31. Same-store sales increased 3 percent. The jeweler held cost of sales in check and noted that favorable product costs and price increases for all product categories pushed gross margin higher to 59.9 percent from 57.5 percent one year earlier. Profit rose 16.2 percent to $124.12 million or 96 cents per share. Tiffany & Co.'s effective tax rate in the second quarter was 35.5 percent, up from 34.2 percent one year ago. The company's cash and cash equivalents and short-term investments totaled $398 million at the close of the quarter, down from $490 million in July 2013. Short-term and long-term debt totaled $1.03 billion, up from $964 million and the retailer's inventory level increased 9 percent to $2.5 billion. Sales across the Americas rose 9 percent year on year to $484 million, with comparable-store sales increasing by 8 percent. In the Asia-Pacific, Tiffany & Co.'s sales increased 14 percent to $237 million, while same-store sales rose 7 percent. Consumers in Japan pulled back on spending since the government implemented a tax scheme in April and Tiffany reported that sales fell 13 percent in the quarter to $119 million, while comparable-store sales fell 13 percent. In Europe, total sales increased 8 percent to $120 million; however, same-store sales declined 8 percent. Tiffany & Co. observed strong sales increases in Russia and in the United Arab Emirates.
Michael J. Kowalski, the chairman and CEO of Tiffany & Co., said, “These healthy second quarter results reflected solid sales growth in our stores, particularly in the Americas and Asia-Pacific regions. In addition, an improved gross margin was an important contributor to the earnings growth. We were also pleased with solid performance across most product categories, ranging from the success of perennial classics in fine, statement and engagement jewelry to our newest ATLAS collection, and we are excited about the current debut of our new Tiffany T jewelry collection.” Tiffany & Co. raised its earning outlook for the fiscal year by 5 cents to a range of $4.20 to $4.30 per diluted share based upon worldwide net sales increasing by a high-single-digit percentage, a 6 percent increase in inventory and higher operating margins.
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