TIFFANY’S STERLING SEASON: NET UP 88%
Byline: Vicki M. Young / Arnold J. Karr
NEW YORK — Tiffany & Co., showing increased sales growth in its three distribution channels, Tuesday reported a first- quarter earnings jump of 88 percent.
In the quarter ended April 30, the jewelry and gift retailer reported earnings of $30.4 million, or 40 cents a diluted share, compared with $16.1 million, or 22 cents, in the 1999 year-ago period. Earnings per share in 1999 have been adjusted to reflect a two-for-one stock split in July 1999. Sales rose 26.1 percent to $343.2 million from $272.3 million.
The New York-based company said that U.S. retail sales, Tiffany’s largest source of revenue, rose 28 percent to $169.2 million, while comparable-store sales “increased 28 percent due to geographically broad-based growth.”
Mark Aaron, vice president for investor relations, said in Tuesday’s conference call that the 28 percent growth in comps includes a 19 percent increase in Tiffany’s New York flagship store, an aggregate comp of 32 percent in the U.S. branch stores and a 23 percent increase in the five-store New York region. The comps, Aaron noted, were fueled by a higher number of transactions, an increase in customer conversion rate and an increase in the average price of the units sold. He added, “We saw no meaningful aberration in trends despite sharp volatility week to week in the equity markets.”
International retail sales increased 26 percent to $147.4 million, with comps strong in all key regions. Sales from direct marketing, the third and smallest of Tiffany’s three distribution channels, rose 15 percent to $26.6 million, mostly from growth in corporate and catalog sales. The direct marketing channel also was helped by results from Tiffany’s e-commerce initiative.
James Fernandez, executive vice president and chief financial officer, said, “We believe we’re very well positioned for success going forward.” He noted that the company recently opened its third store in the Chicago market at the Old Orchard Center and is looking to open new sites in Greenwich, Conn., and in Maui this year. Another as yet unidentified U.S. site is a possibility later this year, he added. Internationally, the company is planning new stores in Japan, Hong Kong, Taiwan, Korea and in Mexico City.
The cfo noted that the retailer is in the process of “greatly expanding” the products offered at its tiffany.com site and is on track to launch its online gift registry “in the coming months.”
Other specialty retailers reporting results on Tuesday:
Cato Corp., operator of 817 specialty stores bearing the Cato and It’s Fashion nameplates, managed increases of 6 percent in both sales and net income despite a 1 percent decrease in same-store sales during the quarter.
Net income for the 13 weeks ended April 29 was $14.6 million, or 57 cents a diluted share, up 6.0 percent from the $13.6 million, or 51 cents a diluted share, reported in the year-ago period. The 1999 quarter’s profits benefited $147,000 on a post-tax basis from an accounting change.
Revenues in the quarter were up 5.9 percent to $167.2 million from $157.9 million. Retail revenues were ahead 6 percent to $162.2 million.
“In spite of a weak Easter and cooler weather compared to last year, we had a record first quarter,” said John Cato, vice chairman, president and chief executive, in a statement. “This marks our 13th consecutive quarter of earnings improvement and shows the strength of our strategies and management team in driving long-term growth.”
According to Cato, the company also benefited from the “Look Smart. Buy Smart” marketing campaign it introduced in the first quarter. “We have enhanced our marketing programs to more effectively communicate this value message to our customer through in-store signage and collateral materials, print, radio and our Web site. Building the Cato brand will be a major initiative in 2000 as we continue to execute our plans to grow profitably.”
The company, based in Charlotte, N.C., opened 12 stores, closed four and relocated or remodeled 38 during the quarter.
Same-store sales growth of 17.1 percent contributed to a quadrupling of earnings at Gadzooks, the Dallas-based specialty chain.
Net income for the 328-unit chain was $2.5 million, or 27 cents a diluted share, compared with $600,000, or 7 cents, in the 1999 quarter. Sales picked up 22.9 percent to $63.3 million from $51.5 million.
“This was an outstanding quarter,” said Jerry Szczepanski, chairman and ceo, in a statement. “Both sales per square foot and earnings were better than any other first quarter in the company’s history.”
He noted inventories were in line with plan, while merchandise margins were “strong.”
The company plans to increase total store square footage by 18 percent this year. Of 50 stores planned for the year, three are now open and another 25 will debut during the current quarter, which concludes July 29.