Tiffany & Company (TIF) recently posted stronger-than-expected first-quarter 2010 results buoyed by improved demands for luxury items worldwide. Tiffany’s sales were hit hard by the recent economic downturn, when consumers lowered their discretionary spends.
The quarterly earnings of 50 cents a share, excluding one-time items, rose more than twofold from 22 cents delivered in the prior-year quarter, and came well ahead of the Zacks Consensus Estimate of 36 cents.
Tiffany, a high-end jewelry designer, manufacturer and retailer, remains optimistic about fiscal 2010, and forecasts earnings in the range of $2.55 to $2.60 per share, up from its previous guidance range of $2.45 to $2.50. The current Zacks Consensus Estimate for fiscal 2010 is $2.49.
Net sales for the quarter jumped 22% to $633.6 million from the prior-year quarter, signaling the renewed demand for jewelry in the Americas , Asia-Pacific and European regions. Comparable-store sales soared 14%. In constant currencies net sales climbed 18% and comps grew 10% during the quarter.
Tiffany now anticipates total net sales for fiscal 2010 to rise by 11%.
The jewelry market was hit hard by the global meltdown, which triggered a shift in focus to cheaper private label brands, but as the recession eased, demand for luxury items improved. Tiffany is well positioned to deliver robust sales and earnings growth. The company holds a significant position in the world jewelry market and is poised to benefit from its increased geographic reach.
By geographic segment, sales in the Americas grew 22% to $315.3 million, whereas comps rose 17% during the quarter; sales in the Asia-Pacific region jumped 50% to $122.3 million and comps increased 33%; sales in Europe climbed 25% to $68.6 million and comps rose by 20%. Other sales were $12.3 million compared to $4.9 million in the year-ago quarter.
Sales in Japan remained weak, and dropped 2% to $115 million, whereas comparable-store sales fell 5%.
For fiscal year 2010, management now expects a mid-twenties percentage increase in sales in the Asia-Pacific region, low-double digit percentage rise in the Americas, high-single digit percentage growth in Europe, but a low-single digit percentage decline in Japan. Other sales are expected to remain flat.
With signs of improvement in the retail environment, Tiffany has boosted its store expansion program. The company now plans to open 16 stores (2 in Europe, 6 in the Americas, and 8 in Asia-Pacific) in fiscal 2010. The company currently operates 221 stores.
Tiffany repurchased 319,500 shares at $44.62 per share, aggregating $14.3 million. The company still has $388 million at its disposal under the existing authorization, which expires in January 2011.
The company ended the quarter with cash and cash equivalents of $673.8 million, and total short-term and long-term debt was 39% of shareholders’ equity compared with 51% in the prior-year quarter.
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