Tiffany & Co. Posts Slight Rise on Year in Holiday Season Sales

(IDEX Online) – Tiffany & Co. said its worldwide sales for the two months ended December 31 were $966 million, up slightly from $961 million a year before.

Sales growth in Asia-Pacific and Japan were largely offset by lower sales in the Americas and Europe, with worldwide comparable store sales down 2%.

CEO Frederic Cumenal said, "These overall holiday period sales results were somewhat lower than we had anticipated, but we continue to benefit from a favorable gross margin and prudent expense management. Although we do not anticipate any significant improvement in 2017 to the macroeconomic challenges that we faced this year, we continue to focus on our initiatives to enhance our stores and our customers' experience, and to add newness to our product assortment, while maintaining effective marketing communications and a well-developed supply chain. We believe executing on these initiatives, which are within our control, will contribute over the long-term to strengthening Tiffany's competitive position among global luxury brands."

Net sales by region were as follows:

• In the Americas, both total sales of $483 million and comparable store sales were 4% below the prior year. On a constant-exchange-rate basis, total sales declined 4% and comparable store sales declined 3%. Management attributed the lower sales to local customer spending, with a decline in U.S. sales exacerbated by a 14% decline at the company's flagship store on Fifth Avenue in New York, which we attribute at least partly to post-election traffic disruptions.  The store is located next to Trump Tower and the area has seen disruptions since Donald Trump won the presidential election and has been holding meetings in the building.

• In the Asia-Pacific region, total sales increased 7% to $200 million and comparable store sales declined 4%. On a constant-exchange-rate basis, total sales rose 9% and comparable store sales declined 3%. Management noted strong growth in retail sales in China and in wholesale sales in Korea, but softness in most other markets throughout the region.

• In Japan, total sales rose 16% to $143 million and comparable store sales rose 21%, which management attributed to higher spending by local customers. On a constant-exchange-rate basis, total sales increased 8% and comparable store sales rose 12%. Strong retail sales growth was partly offset by lower wholesale sales.

• In Europe, total sales of $119 million were 10% below the prior year and comparable store sales declined 11%. On a constant-exchange-rate basis, total sales were equal to the prior year and comparable store sales were 4% below the prior year. Management attributed the sales performance to weak demand across continental Europe tied to domestic and foreign tourist spending, and noted modest growth in local-currency sales in the United Kingdom.

• Other sales of $20 million rose 33% and comparable store sales declined 7% reflecting increased wholesale sales of diamonds, offset by lower retail sales in the United Arab Emirates (UAE).

• As of December 31, 2016, the company operated 314 stores (125 in the Americas, 86 in Asia-Pacific, 55 in Japan, 43 in Europe, and five in the UAE), versus 307 stores a year ago (125 in the Americas, 81 in Asia-Pacific, 56 in Japan, 40 in Europe, and five in the UAE).

In its full year 2016 outlook, the firm said it continues to expect worldwide net sales to decline by a low single-digit percentage from the prior year. These expectations are approximations and are based on the company's plans and assumptions, including: (i) worldwide gross retail square footage increasing 3%, net through 11 store openings, 5 relocations and 6 closings; (ii) operating margin below the prior year due to an anticipated increase in gross margin more than offset by SG&A expense growth; (iii) interest and other expenses, net lower than 2015; (iv) an effective income tax rate consistent with the prior year; (v) the U.S. dollar unchanged at current spot rates versus other foreign currencies for the balance of the year; and (vi) weighted average diluted shares outstanding lower than in fiscal 2015.