TIFFANY RAISED its full-year profit outlook as more shoppers worldwide bought its jewellery during the bridal season, helping it overcome rising gold and diamond costs and sending its shares up more than 5 per cent.
Tiffanys sales gains were strong across the board during the quarter to July 31st. Chief executive Stephen Kowalski said sales so far in the current quarter are outpacing Tiffanys own forecasts despite continuing economic uncertainty.
The company expects sales to rise by a high teen percentage for the year ending in late January, up from a previous forecast of a mid-teen percentage increase.
At its flagship store on Manhattans Fifth Avenue, where it gets about a tenth of its business, sales rose 41 per cent, helped by international tourists. In Asia, outside of Japan, revenue rose 45 per cent excluding the effect of a weak dollar, thanks to the appetite of Chinas emerging middle class for Western luxury brands.
Sales also rose by double digits in Europe, where wealthy Russian and Chinese tourists account for as much as a quarter of total luxury spending by some estimates. Sales also rebounded in Japan.
Overall, Tiffany sales, excluding the effect of currency translations, rose 24 per cent to $872.7 million in the second quarter, while sales at stores open at least one year rose 22 per cent.
Tiffany said its gross margins rose 1.2 percentage points to 59 per cent of sales, with revenue increasing enough for the retailer to absorb higher costs for gold, diamonds and silver.
Tiffanys price increases, which faced little consumer resistance, have “a recipe for success”, Wall Street Strategies analyst Brian Sozzi said in a note. – (Reuters)
