(IDEX Online) – Tiffany & Co. reported that worldwide net sales increased 1% to $949 million and comparable store sales declined 2% in the three months ended October 31, reflecting mixed results across geographic regions and product categories.

 

A modest increase in fashion jewelry sales was offset by softness in other product categories, the jeweler said in a statement.

 

Net earnings increased 5% in the third quarter to $95 million from $91 million.

 

In the year-to-date (nine months ended October 31), worldwide net sales of $2.8 billion were 4% below the prior year, and comparable store sales declined 6% due to varying rates of decline in all regions except Japan. On a constant-exchange-rate basis, worldwide net sales and comparable store sales were 4% and 7%, respectively, below the prior year.

 

Net earnings were $288 million compared with $301 million in the prior year.

 

Frederic Cumenal, chief executive officer, said, "We are encouraged by some early signs of improvement in sales trends, but we clearly need more positive data over time before this can be considered an inflection point. In this recent quarter, we saw a smaller sales decline in the U.S. from earlier this year, while Asia-Pacific results reflected strong growth in mainland China and a relatively smaller decline in Hong Kong. Our business in Japan performed well which we attribute to spending by domestic consumers, but we believe the strengthening of the yen has negatively impacted purchases by Chinese consumers. We also saw relative strength in UK sales, but a continuation of softness on the European continent.

 

"This year, we've added exciting new designs across our jewelry and watch categories and are pleased with initial customer response. As the global environment continues to reflect economic and other challenges that we believe are continuing to affect customer demand, it is more important than ever that we remain focused on strategies to deliver extraordinary products and experiences to our customers. Over the long-term, our objective is to enhance profitability and productivity through sales growth and prudent expense and inventory management, while further strengthening our competitive position among global luxury brands."

 

In the Americas, total sales of $417 million in the third quarter were 2% below the prior year, and sales of $1.25 billion in the year-to-date were 7% below the prior year; comparable store sales declined 2% and 7% in the respective periods. Management attributed the sales decline in the quarter to lower spending by U.S. customers which was largely offset by higher spending attributed to foreign tourists primarily from Japan.

 

In the Asia-Pacific region, total sales rose 4% to $247 million in the third quarter and declined 4% to $715 million in the year-to-date; comparable store sales declined 7% and 11%, respectively. Management noted double-digit sales growth in China, solid retail and wholesale sales growth in Korea and a decelerating rate of sales decline in Hong Kong, as well as continued sales declines in Australia and Singapore.

 

In Japan, sales benefited from the yen strengthening versus the U.S. dollar, with total sales increasing 13% to $150 million in the third quarter and 10% to $419 million in the year-to-date, but were negatively affected by lower wholesale sales; comparable store sales rose 20% and 15%, respectively. Management noted higher spending attributed to local customers in the quarter, along with lower spending attributed to Chinese tourists in both periods.

 

In Europe, total sales declined 10% to $104 million in the third quarter and 10% to $312 million in the year-to-date; comparable store sales declined 14% and 15%, respectively. Management attributed soft demand across continental Europe, especially in France, to both local customers and foreign tourists, while strong local-currency sales growth in the United Kingdom was primarily attributable to higher foreign tourist spending.

 

Other sales rose 18% to $31 million in the third quarter due to increased wholesale sales of diamonds, and declined 7% to $71 million in the year-to-date as an increase in wholesale sales of diamonds was offset by lower retail sales in the United Arab Emirates. Comparable store sales declined 12% and 19% in the respective periods.

 

Tiffany opened four company-operated stores in the third quarter and closed two existing locations, all in the Asia-Pacific region. At October 31, the company operated 313 stores (125 in the Americas, 85 in Asia-Pacific, 55 in Japan, 43 in Europe, and five in the UAE), versus 305 stores a year ago (125 in the Americas, 79 in Asia-Pacific, 56 in Japan, 40 in Europe, and five in the UAE).

 

With respect to the impact of recent election-related activity near the company's New York flagship store (Trump Tower), management has noted some adverse affect on traffic in that store and a continuation of sales softness relative to prior year and to the company's other U.S. stores this year. That store represented less than 10% of worldwide net sales for the three and nine-month periods ended October 31, as well as for each quarter in fiscal 2015. The company cannot provide any assurance that sales in that store will not be negatively affected by this activity in the fourth quarter or in any future period.