NEW YORK — Tiffany & Co. said it plans to introduce a new non-Tiffany retail concept in 2004, which will capitalize on pearl jewelry, and it reported lower margins and a one-time benefit in 2002 offset skyrocketing U.S. sales to lower its third-quarter net income 20.3 percent.
This story first appeared in the November 14, 2003 issue of WWD. Subscribe Today.
The luxury jewelry retailer, based here, said for the three months ended Oct. 31, income fell to $28 million, or 19 cents a diluted share, from $35.2 million, or 24 cents, a figure boosted by a one-time $8-million, or 5- cent, tax benefit in 2002.
Overall sales rose 17.5 percent to $430.1 million from $366 million. With both the number and size of transactions up, U.S. retail sales rose 20 percent to $202.8 million and comparable-store sales extended 16 percent, including a 15 percent comp increase in the New York flagship store on Fifth Avenue. Excluding currency fluctuation, worldwide sales rose 15 percent, 10 percent on a comp basis.
James Fernandez, chief financial officer, said on a conference call, “It looks like we may be headed into a strong holiday season. It certainly appears that Tiffany’s customers are more confident in their purchasing than they were a year ago.”
That and a small increase in fourth-quarter earnings estimates notwithstanding, shares of Tiffany fell $3,43, or 7.1 percent, to $44.70 in New York Stock Exchange trading Wednesday. Dana Cohen at Banc of America Securities maintained her “buy” rating on the stock.
Gross margin dropped to 55.3 percent of sales in the quarter, versus 59 percent last year, because of the growth in lower-margin diamond jewelry and higher precious metal costs.
By product category, the firm saw strength in every jewelry category, with significant growth in diamonds.
On the international front, third-quarter sales rose 11 percent to $173.5 million, but were up 5 percent at constant exchange. Comps fell 3 percent in local currencies and were below expectations in Japan, Tiffany’s largest international market, but increased 25 percent in other Asia-Pacific markets and 10 percent in Europe.
For the nine months, income rose 4.4 percent to $105 million, or 71 cents, versus $100.6 million, or 68 cents. Sales improved 16.6 percent to $1.27 billion from $1.09 billion. At constant exchange, sales rose 14 percent and worldwide comp sales rose 6 percent. U.S. comps rose 9 percent.
Separately, Tiffany-backed Temple St. Clair’s second unit is set to open today at the Mall at Short Hills in Short Hills, N.J. The 1,475-square-foot boutique was created by interior designer Randall Ridless and architect Dan Barteluce, and features custom-made bronze doors, hardwood floors and handmade Tibetan rugs.