By  on September 1, 2005

NEW YORK — Driven by "exceptionally strong" sales of high-ticket items, Tiffany & Co. reported a 52.8 jump in second-quarter earnings on a double-digit sales gain. The luxury specialty retailer also raised its earnings guidance for 2005.

As a result, shares of the company soared 12.3 percent to close at $37.42.

For the three months ended July 31, income skyrocketed to $50.6 million, or 35 cents a diluted share, from $33.1 million, or 22 cents, in the same year-ago quarter. Sales rose 10.5 percent to $526.7 million from $476.6 million. The firm said same-store sales increased by 6 percent in the U.S., which comprises a 6 percent growth rate in branch store sales and a 3 percent increase in its New York flagship sales. U.S. retail sales were up 8 percent to $267.7 million. In Japan, same-store sales rose by 1 percent in local currency.

For the six months, net income rose 29.6 percent to $90.6 million, or 62 cents a diluted share, from $69.9 million, or 47 cents, a year ago. Sales gained 11 percent to $1.04 billion from $933.6 million.

During the second quarter, the company began reporting its U.S. business gift sales within its U.S. retail channel instead of its direct marketing channel. The direct marketing channel in the quarter gained 5 percent to $30.4 million, due mostly to increases in the amounts spent for e-commerce and catalogue orders. International retail sales in the second quarter rose 12 percent to $202.1 million.

Michael Kowalski, chairman and chief executive officer, said in a statement, "These quarterly results are encouraging and we believe well position Tiffany for a successful second half."

Kowalski said the company upped its expectation for full-year 2005 earnings per share to a range of $1.55 to $1.65 a diluted share from previous guidance of $1.45 to $1.55.

Mark Aaron, vice president of investor relations, said during a conference call to Wall Street, "U.S. retail sales rose 8 percent in the quarter, primarily due to an increase in the average transaction size. Essentially, higher jewelry unit volume was virtually offset by a volume decline in accessories and tableware."

Aaron said while store traffic was somewhat lower than the prior year, the conversion rate was higher. "Our customer analysis indicated similar growth in sales to local customers and tourists, although the growth in our New York flagship sales came from higher foreign and domestic tourist spending," he said.

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