NEW YORK — A lift in overall sales boosted Tiffany & Co.’s net income 28.8 percent in its second quarter as the famed jewelry retailer reaffirmed its earnings forecast for the year.
For the three months ended July 31, the New York-based company said income climbed to $41.1 million, or 28 cents a diluted share, above Wall Street’s expectations of 24 cents. Last year, Tiffany’s earnings reached $32.7 million, or 22 cents.
“Tiffany’s second quarter was certainly a good one,” James?Fernandez, chief financial officer, said on a conference call. “The past couple of years has presented various challenges, but Tiffany has demonstrated its resiliency and flexibility.”
Tiffany’s better-than-expected results dazzled investors who sent shares of its stock to a new 52-week high of $37.72 in intraday trading. Tiffany added $1.13 a share, or 3.1 percent, to close at $37.41 in New York Stock Exchange trading.
In the quarter, net sales rose 18.2 percent to $442.5 million over sales of $374.4 million and worldwide comparable-store sales were up 8 percent on a constant exchange basis, with particular strength in the U.S., but strategic progress was also made in many international markets, the company said.
U.S. retail sales increased 14 percent in the quarter to $213 million and were up 9 percent on a comp basis, more than expected, and included an 11 percent increase in branch stores and a 2 percent lift at its New York flagship. Comp growth was generated by both an increased number of transactions and an increased average transaction amount. Most jewelry categories enjoyed solid results, with particular strength in engagement, gold, silver and designer-name jewelry and watches, offset by softness in tableware and accessories.
International retail sales rose 14 percent, to $169 million, and were up 9 percent at constant exchange. In local currencies, comps in Japan increased fractionally, compared with a 13 percent decline in 2002, and were slightly below expectations. Comps were up 4 percent in Asia-Pacific and, primarily because of strength in London, 14 percent in Europe.
Direct marketingsales rose 13 percent to $43.9 million, with Internet-catalog sales up 21 percent and a 2 percent increase in business sales. Specialty retail sales were $16.5 million, reflecting the consolidation of sales of the Little Switzerland unit.Tiffany said that with the economic conditions showing various signs of improvement in many countries, perhaps even in Japan, it is maintaining its outlook for the second half. Earnings per share in 2003 are projected at $1.33 to $1.38, which assumes a low-single-digit comp growth in Japan and a mid-single comp growth in the U.S.
The company also said it expects earnings to decline in the third quarter, due to a tax benefit last year, but said it anticipates to resume growth in the fourth quarter and noted it is prepared for a good holiday season.
“Tiffany’s results, combined with ongoing initiatives to open new stores and introduce new products allow us to remain comfortable with our earnings expectations for fiscal 2003,” Michael Kowalski, chief executive, said in a statement.
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