An 11 percent increase in same-store sales helped Tiffany & Co.’s fourth-quarter earnings bounce back to the high end of its own projections, but the jewelry retailer fell short of Wall Street’s expectations.
In the three months ended Jan. 31, the New York-based firm logged net income of $140.4 million, or $1.10 a diluted share, more than quadrupling the year-ago mark of $31.1 million, or 25 cents. The 2008 figure included charges for restructuring and other purposes which reduced EPS by 56 cents.
The profit profile matched the high end of projections lifted by Tiffany when it reported a 17 percent increase in year-over-year holiday sales on Jan. 12, but EPS for continuing operations of $1.09 fell 4 cents short of the $1.13 analysts, on average, had expected. EPS for 2010 was projected at $2.45 to $2.50, 2 cents to 7 cents higher than the consensus estimate of analysts prior to the report.
After spending much of the day in negative territory, shares closed at $47.41, up 16 cents, or 0.3 percent, before turning lower in after-hours trading.
Net sales rose 17.2 percent to $981.4 million from $837.6 million. As has often been the case among luxury retailers in recent months, revenues failed to match levels from the final quarter of 2008, when Tiffany registered $1.05 billion in net sales. Eliminating the positive effect of currency fluctuation, comparable-store sales rose 8 percent during the quarter, with U.S. comps up 11 percent and, adjusted for currency effects, Europe up 14 percent and Asia-Pacific up 3 percent as a 9 percent decline in Japan was more than offset by a 24 percent boom in other parts of the region.
Net sales were up 14 percent in the Americas to $523.5 million, up 14 percent in Asia-Pacific to $318 million and up 29 percent in Europe to $311.8 million. Gross margin contracted to 58.7 percent of sales from 59.4 percent a year ago, principally because of increased wholesale trade in rough diamonds at little or no profit.
Mark Aron, vice president of investor relations, said on the company conference call that sales in the New York flagship rose 22 percent, and 19 percent in the New York territory, in the quarter. Although the flagship’s volume was down 15 percent for the year, and its share of worldwide sales fell to 9 percent last year from 10 percent in 2008, sales per square foot finished at $5,500.
Aron told WWD the company remains firm in its belief that the U.S. market could support 150 stores, versus the current count of 79 among its 220 total, and that its typical footprint moving forward will be about 3,700 square feet. “We tested a 2,500-square-foot model that didn’t have engagement jewelry, but we quickly learned that a Tiffany without engagement jewelry wasn’t acceptable to our customers,” he said.
In the new year, the company plans 17 new stores — six in the Americas, eight in Asia-Pacific and three in Europe — with five of the six North American stores in the U.S. Sales are expected to rise 11 percent.
For the full year, net income expanded 20.4 percent to $264.8 million, or $2.11 a diluted share, from $220 million, or $1.74, in 2008. Net sales contracted 4.9 percent to $2.71 billion from $2.85 billion while comps were down 7 percent and off 8 percent at constant exchange rates. Comps were off 14 percent in the Americas, including a 15 percent drop in the U.S., and, adjusted for currency fluctuation, down 3 percent in Asia-Pacific, principally because of an 11 percent drop in Japan, and up 16 percent in Europe.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion