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Tiffany’s Diamond Wholesale Business Boosts Sales

Aug 24, 2017 8:38 AM   By Rapaport News
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Luxury jeweler Tiffany & Co. reported an increase in revenue and profit in the second fiscal quarter lifted by its wholesale diamond business and e-commerce platform, while its brick-and-mortar stores continued to struggle.

Group sales rose 3% year on year to $960 million during the three months that ended July 31, but comparable-store sales fell 2%, the company said Thursday. Net earnings grew 9% to $115 million for the period as operating margins improved.

“An increase in wholesale sales of diamonds, increased wholesale sales in the Asia-Pacific region and strong e-commerce sales growth” contributed to the improvement, management explained. Fashion and designer jewelry were the strongest product categories, the company added.

Tiffany’s diamond-manufacturing unit, Laurelton Diamonds, sources rough diamonds from De Beers and Alrosa, among others, for its six cutting and polishing factories. Some of the polished production goes to Tiffany for its own jewelry manufacturing, while Laurelton sells the rest to the market.

Tiffany’s wholesale unit falls into the category of “other sales,” which also includes store sales in non-core regions. Sales for the division jumped 74% to $32 million during the quarter, entirely due to the stronger wholesale performance, the company reported.

As for its retail operations, Tiffany noted strength in China and Japan, while the Americas, the rest of Asia and Europe continued to show weakness.

In the Americas region, comparable-store sales — a measure of growth among stores open for more than a year — declined 1% during the period, primarily due to lower spending by foreign tourists, the company explained. Comparable-store sales in Asia Pacific fell 7%, with growth in mainland China offset by softness in other countries in the region, the jeweler reported.

Japan was a standout performer for the company, with a 3% rise in comparable-store sales, driven by improved spending by local consumers, while the measure slid 2% for Europe.

For the first half, Tiffany’s sales rose 2% to $1.86 billion, while comparable-store sales fell 2%. Net earnings grew 8% to $207.9 million for the six-month period. Tiffany’s shares rose 2% in pre-market activity on the New York Stock Exchange following the earnings announcement.
Tags: Jewelry, Laurelton Diamonds, Rapaport News, retail, Tiffany, Tiffany & CO.
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