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RAPAPORT... Tiffany & Co.'s revenue fell 4.9 percent year on year to $962.4 million in the first quarter that ended on April 30. Same-store sales fell 7 percent. Cost of sales declined 6.9 percent to $393.4 million and gross margin as a percentage of sales increased to 59.1 percent compared with 58.2 percent one year earlier. Profit slipped 16.5 percent to $104.9 million. The company stated that net sale and earnings declines reflected the negative effects from a stronger U.S. dollar and difficult comparisons in Japan. Sales by region and on a constant-exchange-rate basis, fell 18 percent in Japan, but increased 3 percent in the Americas, 4 percent in Asia Pacific and 21 percent in Europe. Inventory as of April 30, fell 2 percent to $2.4 billion and capital expenditures increased 5.7 percent to $37 million during the quarter. Frederic Cumenal, Tiffany & Co.'s CEO, said, “We started the year facing well-known challenges from both global economic uncertainties and the effect of a strong U.S. dollar on the translation of foreign-denominated sales into dollars and on foreign tourist spending in the U.S., as well as a difficult sales comparison in Japan. Despite those factors, our first-quarter results for net sales, as well as for gross margin and net earnings, were somewhat better than we anticipated. First-quarter highlights also included the continuing success of the stylish TIFFANY T jewelry collection, as well as the launch of our extraordinary CT60™ watch collection. “Our plans this year include expanding existing jewelry collections with new designs and opening stores in a number of important markets, all intended to further enhance Tiffany’s position as a leading global luxury brand. Despite these plans and the better-than-expected first quarter results, our forecast for minimal earnings growth for the full year continues to reflect caution regarding our expectations for fiscal 2015 in light of the strong dollar and other global economic uncertainties. However, we believe we can return to a healthier rate of double-digit earnings per share growth over the long term,” he said.
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