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Tiffany Income Climbs 26%

Surprisingly strong sales in Japan and the Asia-Pacific region gave the New York-based jeweler the confidence to raise full-year guidance.

Surprisingly strong sales in Japan and the Asia-Pacific region gave Tiffany & Co. the confidence to raise full-year guidance after the jeweler posted a 25.8 percent jump in first-quarter net income.


Wall Street cheered the results, lifting Tiffany’s shares $6, or 8.6 percent, to $76.04 Thursday.

The New York-based jeweler amassed net income of $81.1 million, or 63 cents a diluted share, for the three months ended April 30. This compared with income of $64.4 million, or 50 cents, in the year-ago quarter. Quarterly net sales gained 20.1 percent to $761 million from $633.6 million in 2010.

Analysts estimated earnings of 57 cents on sales of $704 million, according to Yahoo.

The retailer said lower wholesale sales of diamonds, which carry slimmer margins, in addition to sales leveraged on fixed costs helped gross margin improve to 58.3 percent of sales versus year-ago margin of 57.8 percent.

Sales in the Americas increased 19 percent to $374.7 million, or 18 percent at constant exchange, as comparable-store sales rose 17 percent. Sales in the New York flagship rose 23 percent.

In Asia-Pacific, sales were up 37 percent to $167.2 million, or 31 percent at constant exchange and 26 percent on a comp basis. In Europe, sales increased 25 percent to $85.6 million, or 19 percent at constant exchange. Strength in continental Europe bolstered comps in Europe 15 percent.

Despite the March 11 earthquake and subsequent tsunami and nuclear crisis, sales in Japan increased 7 percent to $85.6 million, but declined 3 percent on both a comp and constant-exchange basis.

Less than two weeks after the disaster, Tiffany had estimated that first-quarter sales in Japan would fall by 15 percent.

On Thursday’s conference call, Mark Aaron, vice president of investor relations, said Japan has been “of concern,” but, even excluding the translation effect, sales in Japan were “still much better” than expected.

The surprising regional results contributed to the retailer raising its annual guidance, he said, but Aaron warned that there may be “continued volatility in Japan sales for a while.”

In 2010, 18 percent of Tiffany’s total sales came from its Japan business.

Nonetheless, Tiffany projected full-year EPS of between $3.45 and $3.55 a share, which exceeded analysts’ estimates of $3.33 a share.