Tiffany's worldwide sales up 11% in Q2
Tiffany & Co. reported results for the three months (second quarter) and six months (first half) ended July 31, 2008. Strong net sales growth in Asia-Pacific and Europe led to an 11% increase in worldwide net sales in the second quarter.
Combined with a higher operating margin, this resulted in a 21% increase in net earnings from continuing operations and a 31% increase in earnings per diluted share in the quarter. These results enabled the Company to slightly increase its earnings expectation for the full year.
Net sales in the second quarter increased 11% to $732.4 million. On a constant-exchange-rate basis which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars (see attached "Non-GAAP Measures" schedule), worldwide net sales rose 7% and comparable store sales declined 1%.
In the first half, net sales rose 11% to $1.40 billion. On a constant-exchange-rate basis, sales increased 7% and comparable store sales rose 1%.
Net earnings from continuing operations in the second quarter rose 21% to $80.8 million, and increased 31% on a diluted per share basis to $0.63 from $0.48 in the prior year. Net earnings per diluted share were $0.29 in the prior year due to a loss from discontinued operations. Net earnings on a diluted per share basis benefited from fewer shares outstanding due to the Company's share buy-back program.
In the first half, net earnings from continuing operations increased 20% to $145.2 million, and rose 31% on a diluted per share basis to $1.13 per diluted share, versus $0.86 a year ago. Net earnings per diluted share were $0.67 a year ago.
In the second quarter and first half of 2007, the Company had recorded an after-tax charge of $23.6 million related to the sale of its Little Switzerland business, as well as losses from those operations.
Net sales by geographical region were as follows:
• Sales in the Americas region increased 3% to $422.4 million in the second quarter and 4% to $796.0 million in the first half largely due to incremental sales from new stores. In the U.S., comparable store sales declined 4% in the second quarter and 2% in the first half; in the respective periods, sales in the New York flagship store rose 5% and 10% reflecting increased spending by non-U.S. visitors, while comparable branch store sales declined 6% and 5%. Combined Internet and catalog sales in the U.S. declined 4% in the second quarter and 2% in the first half. The Company achieved strong sales growth in Canada and Latin America.
• Sales in the Asia-Pacific region increased 17% to $214.2 million in the second quarter and 19% to $436.3 million in the first half. On a constant-exchange-rate basis, sales increased 7% and 8% and comparable stores sales rose 1% and 2% in the respective periods. Strong growth in most countries was partly offset by results in Japan.
• Sales in Europe in the second quarter increased 35% to $71.0 million and 36% to $131.1 million in the first half. On a constant-exchange-rate basis, sales rose 29% and 30% in the respective periods due to comparable store sales growth of 11% and 12% and sales from new stores.