The chain raised its full-year earnings guidance to a range partly above analyst estimates, and CEO Michael Kowalski said the company looked forward to the second half “with a sense of guarded optimism.” Roughly half the company’s revenue now comes from outside the US Growth in the Asia-Pacific region, excluding Japan, was the company’s strongest in the quarter as those economies continue to prosper.
Sales of luxury items fell off around the world during the recession as shoppers limited their spending, even those at the highest income levels. But as the economy gradually recovers, sales have ticked up. The company has seen revenue grow in the third quarter at a low double-digit percentage from last year.
A broad rebound in consumer spending — which, including big-ticket items like health care and housing, accounts for about 70 percent of the gross domestic product - will be critical to any economic recovery. And recovering luxury spending is seen as a harbinger.
In the three months ending July 31, the New York company earned $67.7 million, or 53 cents per share. That’s above the $56.8 million, or 46 cents per share, the company earned in the year-ago period.
Excluding one-time items, the company earned 55 cents per share - 2 cents above analyst estimates, according to Thomson Reuters.
Revenue rose 9 percent to $668.8 million, below analyst estimates of $690.2 million.
Tiffany now expects net income to range from $2.60 to $2.65 per share this year, above its prior estimate of $2.55 to $2.60, which it had increased in May. Analysts expected $2.61.
Revenue at stores open at least a year — a key measurement for retailers — rose 5 percent on a constant currency basis. That’s an important measurement for retailers because it measures growth at existing locations without excluding new or closed ones.
Revenue at the company’s flagship store in New York rose 8 percent in the quarter, the same rate of growth for the overall unit that includes the US, Canada and Latin and South America. Overall revenue in the unit was $350.4 million.
Asian-Pacific revenue jumped 21 percent to $111.5 million, with the largest growth in China, Hong Kong, Macau and Korea. The company opened its 12th store in China in the quarter — in Shanghai — and its fourth in Singapore.
Revenue in Europe rose 14 percent to $76.9 million, on strong growth in Britain and throughout continental Europe.
Revenue in Japan rose 4 percent to $118 million.
The company said earnings growth in the third quarter would be “somewhat restrained” because of higher marketing spending.
Tiffany plans to open 14 new stores this year, including five in the Americas, seven in the Asia-Pacific region and two in Europe. The company operated 223 stores and boutiques at the end of July, up from 211 at the same point last year.
