Shares of Tiffany & Co. advanced more than 9 percent Wednesday after the jeweler reported better-than-expected first-quarter results lifted by a surge in spending in Japan and ongoing strength in luxury.
The firm lifted its full-year earnings guidance and said it expects gross margin improvement for the year, although not at the level of the 200 basis point improvement registered during the first quarter.
Sales in Japan were elevated by consumers rushing to make purchases prior to the April 1 increase in the country’s consumption tax and ended the quarter, which concluded on April 30, at $174 million, up 20 percent in U.S. dollars and ahead 29 percent at constant currency, eliminating the effects of a weaker yen.
On a prerecorded call, Mark Aaron, vice president of investor relations, said since the tax hike, “we’ve been experiencing sales declines, which have been recently moderating. As a result, we’re not changing our previous expectation for healthy sales growth in the full year.”
On a same-store basis and at constant currency, same-store sales in Japan rose 30 percent during the quarter, well ahead of the 10 percent gain registered in Asia-Pacific and the 8 percent increase in the Americas. Although net sales in Europe were up 9 percent in dollars, to $101 million, and ahead 2 percent at constant currency, same-store sales were down 3 percent when currency fluctuation was excluded.
“Geographically, constant currency comps in the U.K. and overall continental Europe were similarly soft, although individual performances by country within continental Europe were mixed,” Aaron said.
Net income in the quarter rose 50.3 percent to $125.6 million, or 97 cents a diluted share, from $83.6 million, or 65 cents, in the year-ago quarter and against consensus estimates for earnings per share of 78 cents.
Revenues picked up 13 percent to $1.01 billion from $895.5 million in the 2013 quarter and were up 15 percent at constant currency. The top line easily beat the consensus estimate for revenues of $955.1 million.
Revised guidance is for full-year EPS of between $4.15 and $4.25, above the previous range of $4.05 to $4.15. The consensus estimate prior to the first-quarter report was for 2014 EPS of $4.17. Gross margin grew to 58.2 percent of sales from 56.2 percent in the prior-year period.
Ralph Nicoletti, executive vice president and chief financial officer, tied the gross margin improvement to “favorable product costs, price increases taken across all product categories and regions, and meaningful sales leverage on fixed costs. And, of course, the strong sales increase in Japan had some positive effect on overall gross margin.”
Shares ended the day at $96.30, up $8.07 or 9.2 percent.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast