Tiffany & Co., the world's second- largest luxury-jewelry retailer, said Friday its first-quarter net income rose a higher-than-expected 19 percent on stronger demand from Europe and Asia which helped make up for weaker sales in the U.S.
Tiffany shares were recently up 3.5 percent in morning trading.
The New York-based retailer said profits totaled $64.4 million, or 50 cents per share, in the three-month period ended April 30. That compared with $54.08 million, or 39 cents per share, in the year-ago period.
The company's sales rose 12 percent to $668.15 million from $595.7 million in the year-ago period.
The results beat estimates of analysts polled by Thomson Financial who had expected earnings of 40 cents per share on sales of $649 million.
We are pleased to start the year with sales and earnings growth above our expectations, said Michael J. Kowalski, chairman and CEO, in a statement. He added that the strong gain in worldwide sales, despite only a modest growth in the U.S. due to a challenging economy, reflects the benefit of globally diversified distribution.
Total sales in the Americas region, which includes the U.S., Canada and Latin and South America, rose 6 percent to $373.6 million from $353.3 million in the year-ago period due to a spike in sales from new stores.
U.S. same-store sales were flat with the year-ago period. Sales on that basis were up 16 percent increase in its 5th Avenue flagship store due to increased foreign tourist spending,, but dropped 4 percent in its other shops.
We believe the U.S. business overall will continue (to) disappoint this year, driven by softness in the branches as well as in the New York City market where Wall Street layoffs are sure to have a negative impact, said Credit Suisse analyst Paul Lejuez in a research note.
Sales in the Asia-Pacific region, which includes business in Japan, in Asia-Pacific countries outside of Japan and in the Middle East, rose 21 percent to $222.0 million from $183.1 million. On a constant-exchange rate basis, sales rose 10 percent and same-store sales increased 4 percent reflecting strong growth in all Asia-Pacific countries other than Japan.
Sales in Europe rose 38 percent to $60.1 million from $43.5 million, while sales in the Asia-Pacific region, which includes business in Japan and the Middle East, rose 21 percent to $222.0 million from $183.1 million.
Looking ahead, the luxury retailer expects to remain on track to meet full-year sales growth goals. While it expects same-store sales to be slightly lower in the current quarter, it forecast a slight increase in the third quarter and a mid-single-digit increase in the last quarter of the year.
It expects worldwide net sales to rise by 10 percent in 2008.It also plans to open the first of its planned smaller format stores later this year in the United States.
The retailer boosted net earnings per share projections to a range of $2.80 to $2.90. That's up from March guidance of $2.75 to $2.85.