Tiffany 1Q earnings up 25 pct, raises year view

AP News
Posted: May 26, 2011 9:56 AM
Tiffany 1Q earnings up 25 pct, raises year view

In another sign that the luxury sector remains strong, Tiffany & Co. said Thursday its first-quarter profit rose 25 percent on higher revenue across all regions worldwide.

The results handily beat expectations and the jewelry maker also raised its forecast for the year above current Wall Street estimates.

Shares rose $6.16, or 8.8 percent, to $76.20 in morning trading.

The New York company, known for its iconic turquoise box, said net income rose to $81.1 million, or 63 cents per share, for the three months ended April 30, up from $64.4 million, or 50 cents per share, a year earlier. Net income includes 4 cents per share of expenses related to Tiffany relocating its headquarters in New York.

Analysts expected 57 cents per share, according to FactSet.

Revenue jumped 20 percent to $761 million from $633.6 million last year, sharply higher than analyst predictions of $702.6 million.

High-end, gold and engagement jewelry sold particularly well, said investor relations vice president Mark Aaron. Silver jewelry, which sold well during the recession since it is relatively lower priced, had some growth but remained constrained.

"The U.S. economic environment that is affecting spending by some of our silver jewelry customers at entry-level price points will likely remain challenging for a while," Aaron said.

Notably, sales in Japan recovered quickly following the devastating earthquake and tsunami. About a quarter of Tiffany's stores are in Japan. Sales in Japan rose 7 percent to $123.4 million.

However, excluding the stronger yen, sales fell 3 percent. Still, that was better than Tiffany expected.

Revenue in stores open at least one year, a key industry metric, also fell 3 percent. Tiffany said all stores closed due to the earthquake have reopened.

Revenue in the Americas, Tiffany's largest region, rose 19 percent to $374.7 million. The region includes the U.S., Canada and Latin America. Revenue from stores open at least one year rose 17 percent, including a 23 percent jump at Tiffany's flagship store in New York, a mecca for tourists.

Revenue in Asia-Pacific rose 37 percent to $167.2 million. In Europe, revenue rose by a quarter to $85.6 million.

While some had speculated results in Hawaii and Guam might suffer from fewer Japanese tourists, the six-store region's revenue in stores open at least one year actually rose 30 percent.

CEO Michael Kowalski said Tiffany will introduce new products this year, increase marketing and advertising and open 19 new stores during the year.

High precious metal and diamond costs caused Tiffany to raise prices earlier this year, and Tiffany said it may raise prices again in various categories and regions to offset the higher costs. But the rising prices have not deterred shoppers, Aaron said.

"Customers are certainly aware of rising commodity costs and we have not experienced any meaningful resistance to higher prices," he said.

For the full year, Tiffany now expects adjusted net income of $3.45 and $3.55 per share from prior guidance of $3.35 to $3.45 per share. Analysts expected earnings of $3.31 a share.

Sales are expected to grow by a "mid-teens percentage" worldwide.