Australia helps put the sparkle in Tiffany & Co profit

Global jeweller Tiffany & Co has credited strong sales growth in Asia-Pacific as a key contributor to solid profit growth in its first half year.

Global jeweller Tiffany & Co has credited strong sales growth in Asia-Pacific as a key contributor to solid profit growth in its first half year.

Releasing its latest results to the New York Stock Exchange overnight, Tiffany said Asia-Pacific and European sales growth contributed to a group-wide sales increase of 11% in the second quarter and a 21% increase in net earnings.

“Sales in the Asia-Pacific region increased 17% to $US214.2 million in the second quarter and 19% to $436.3 million in the first half,” the company said in a statement. “On a constant-exchange-rate basis, sales increased 7% and 8% and comparable stores sales rose 1% and 2% in the respective periods. Strong growth in most countries was partly offset by results in Japan.”

But sales performance in the US was poor. Tiffany said sales in the Americas region increased 3% to $422.4 million in the second quarter and 4% to $796 million in the first half largely due to incremental sales from new stores. In the US, comparable store sales declined 4% in the second quarter and 2% in the first half; in the respective periods, sales in the New York flagship store rose 5% and 10%, reflecting increased spending by non-US visitors, while comparable branch store sales declined 6% and 5%. Combined internet and catalog sales in the US declined 4% in the second quarter and 2% in the first half.

The company achieved strong sales growth in Canada and Latin America.

Sales in Europe in the second quarter increased 35% to $71 million and 36% to $131.1 million in the first half. On a constant-exchange-rate basis, sales rose 29% and 30% in the respective periods due to comparable store sales growth of 11% and 12%, and sales from new stores.

The company operated 196 Tiffany & Co stores and boutiques at 31 July 2008 (82 in the Americas, 95 in the Asia-Pacific region and 19 in Europe) compared with 172 stores (74 in the Americas, 83 in Asia-Pacific and 15 in Europe) a year ago. It recently opened a new Australian store at Perth.

Michael J Kowalski, chairman and CEO, said Tiffany’s global retail operations “once again demonstrated the ability to generate strong operating earnings growth despite weakness in certain individual country markets.

“Our continued expansion throughout Asia and Europe should contribute to increasingly consistent and resilient long-term earnings growth,” he says.

Inside Retailing

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