Tiffany Q1 Results Beat Estimates, Stock Up

(RTTNews) - Jewelry retailer Tiffany & Co. (TIF) Wednesday said its profit for the first quarter declined from the prior year, amid lower sales, owing to adverse currency and difficult prior-year comparisons in Japan. Further, the company incurred higher expenses primarily related to marketing spending. For the full year, the company continues to forecast minimal growth in net earnings per share.

Frederic Cumenal, CEO, said, "We started the year facing well-known challenges from both global economic uncertainties and the effect of a strong U.S. dollar on the translation of foreign-denominated sales into dollars and on foreign tourist spending in the U.S., as well as a difficult sales comparison in Japan. Despite those factors, our first quarter results for net sales, as well as for gross margin and net earnings, were somewhat better than we anticipated."

Net earnings declined to $105 million or $0.81 per share from $125.6 million or $0.97 per share a year ago. On average, 25 analysts polled by Thomson Reuters expected the company to report profit per share of $0.70 for the quarter. Analysts' estimates typically exclude special items.

Worldwide net sales dropped 5 percent to $962.4 million from $1.01 billion. Analysts expected revenue of $918.68 million for the quarter.

On a constant-exchange-rate basis, worldwide net sales rose 1 percent, due to growth in all regions except Japan and increased sales of fashion gold jewelry and statement jewelry. Worldwide comparable store sales were 1 percent below last year.

In the Americas, total sales rose 3 percent and comparable store sales were up 1 percent, reflecting higher sales to U.S. customers offset by lower foreign tourist spending in the U.S. amid the strong U.S. dollar. The comparisons are on a currency-neutral basis.

In the Asia-Pacific region, sales increased 4 percent and rose 2 percent on a comparable store basis, with noteworthy sales growth in China, Australia and Singapore, but meaningful sales declines in Hong Kong and Macau.

In Europe, sales increased 21 percent and comparable store sales increased 17 percent due to growth across continental Europe owing to robust spending by foreign tourists as well as higher sales to local customers.

In Japan, total sales declined 18 percent and comparable store sales declined 24 percent, reflecting difficult comparisons to strong growth in last year's first quarter when comparable store sales had surged 30 percent due to consumer demand before an increase in Japan's consumption tax on April 1, 2014.

SG&A expenses increased 5 percent, largely due to higher marketing expenses as well as incremental expenses related to the company's U.S. pension and post-retirement plans.

Looking ahead, for the fiscal year ending January 31, 2016, the company continues to forecast minimal growth in net earnings per share from the $4.20 earned in fiscal 2014.

This forecast assumes net earnings in the second quarter declining at a more moderate rate than in the first quarter, as well as expected double-digit percentage net earnings growth in the second half of the year.

Cumenal added, "Despite the better-than-expected first quarter results, our forecast for minimal earnings growth for the full year continues to reflect caution regarding our expectations for fiscal 2015 in light of the strong dollar and other global economic uncertainties. However, we believe we can return to a healthier rate of double-digit EPS growth over the long-term."

The stock closed up 1.6 percent on Tuesday at $85.53, and soared 6.6 percent in pre-market activity.