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RAPAPORT... Tiffany & Co. reported that worldwide revenue rose 9.3 percent year on year to $895.5 million and cost of sales jumped 12 percent to $392.3 million for the first quarter that ended on April 30. Profit increased 2.5 percent to $83.6 million or 65 cents per diluted share. Gross margin as a percentage of sales fell to 56.2 percent from 57.3 percent one year ago as Tiffany & Co. continued to shift its product mix toward higher-priced items with lower gross margins. In addition, gross margin benefited from diminished product cost pressure and recent price increases. Tiffany had cash and a cash equivalent of $465 million at the end of its quarter, up from $322 million in the prior year. Short-term and long-term debt totaled $974 million, representing 37 percent of stockholders’ equity, compared with $834 million and 35 percent of equity one year ago. Tiffany's inventory level rose 4 percent year on year to $2.3 billion as of April 30. By region, revenue during the quarter rose 6 percent to $408 million across the Americas, while comparable-store sales rose 3 percent, with relatively stronger growth in the New York flagship store due to the Blue Book anniversary event. In the Asia-Pacific region, sales surged 15 percent by dollar value, and rose 14 percent at constant-exchange rates, to $223 million, with stronger growth in Greater China. Same-store sales jumped 9 percent. Sales in Japan rose 2 percent to $145 million, but on a constant-exchange rate basis, revenue surged 20 percent as comparable-store sales skyrocketed 21 percent. Tiffany reported strong growth from its engagement and higher-end jewelry categories. In Europe, both overall and same-store sales rose 6 percent to $93 million and on a constant-exchange rate basis, revenue rose 8 percent. During the first quarter, Tiffany opened one store, in Xi’an, China and closed one in Taichung, Taiwan. Tiffany operates 275 stores with 115 in the Americas, 66 in the Asia-Pacific region, 55 in Japan, 34 in Europe and five in the U.A.E. Michael J. Kowalski, the chairman of Tiffany & Co., said that sales exceeded guidance. ''In addition, we celebrated Tiffany’s 175th anniversary with our very successful Blue Book event and promotional activities surrounding the debut of the film The Great Gatsby, for which we designed the jewelry.'' Kowalski added that Tiffany maintains its earnings forecast for the full year, mindful of continuing soft sales results in the Americas and the negative translation effect of a weaker yen. ''However, we remain focused on exciting initiatives for this year, including jewelry introductions highlighted by our Great Gatsby and Ziegfeld collections, the Harmony engagement ring and a reinterpretation of our iconic Atlas collection. Tiffany’s global store base is growing this year with a planned net addition of 14 stores and we will be launching our redesigned website later this year.''
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