Tiffany Sees Americas Comps Rise 1% in Q3

Tiffany Sees Americas Comps Rise 1% in Q3

New York–Strong sales in the fashion jewelry and high, fine and solitaire segments helped turn around business for Tiffany & Co. in its third quarter.

Same-store sales in the Americas were up 1 percent in the period ended Oct. 31, while total sales in the region reached $421 million in the third quarter, a 1 percent increase over the prior year.

On a constant-exchange-rate basis, total sales rose 1 percent in the third quarter, with comparable store sales about flat.

The jeweler attributed the sales performance to higher spending by local customers, even as sales to foreign tourists continued to slow. Tiffany noted an increase in the number of jewelry units sold across all categories in the Americas, with the exception of engagement jewelry.

Worldwide, meanwhile, comps were down 1 percent year-over-year, while sales increased 3 percent to $976 million.

On a constant-exchange-rate basis, global sales increased 3 percent and comparable store sales were equal to the prior year.

Net earnings for the quarter increased 5 percent from $95 million in the third quarter last year to $100 million. Gross margin was nearly flat at 61 percent.

Mark Aaron, vice president of investor relations, said during the company’s earnings call Wednesday morning that it was encouraged by the growth of higher jewelry sales volume rather than ticket prices.  

He also noted they saw continued growth in fashion jewelry and resumption of growth in high, fine and solitaire jewelry, led by iconic diamond jewelry designs, especially the popular Victoria, yellow diamonds and Soleste collections.

This was offset by sales of engagement jewelry, which continued to “underperform.”

In response to the trend of consumers wanting to customize their rings, Tiffany has introduced a program in the United States and Canada that allows them to choose their own diamond cut, setting and metal.

Meanwhile, the company’s e-commerce sales grew more than overall sales during the quarter, but Aaron noted that, while it will continue to invest in online and digital marketing, Tiffany believes most customers “still are and will continue to be attracted to the in-store experience.”

Most recently, Tiffany’s Fifth Avenue flagship in New York has seen a lot of activity, including the reopening of its just-revamped fourth floor, which is home to accessories and tableware collection. It also now houses the Blue Box Café, which, Aaron said, based on long lines every day, is “fast becoming a New York tradition.”

Tiffany also recently opened two pop-up shops in New York City–in Rockefeller Center and Grand Central Terminal–offering a selection of jewelry and gifts curated by Creative Director Reed Krakoff. Aaron said the company is “excited about the sales potential and brand exposure from those two shops.”

Globally, the company saw mixed results in its sales performances during the most recent quarter.

In Asia-Pacific, total sales rose 15 percent to $283 million in the third quarter while comps were up 2 percent. Tiffany said the sales growth in the region resulted from increased wholesale and retail sales.

In Japan, meanwhile, total sales of $139 million in the third quarter were down 8 percent compared with the prior-year period. Same-store sales also were down 8 percent during the three-month period. According to Tiffany, the sales decline reflected the negative effect of a weaker yen versus the dollar.

Total sales in Europe were up increased 5 percent in the third quarter to $110 million, while comps were down 3 percent. The retailer noted total retail sales growth across most of continental Europe, with a decline in sales in the U.K.

Year-to-date, Tiffany has opened seven company-operated stores and closed five.

As of the end of October, it operated 315 stores (125 in the Americas, 86 in Asia-Pacific, 54 in Japan, 46 in Europe and four in the UAE), compared with 313 stores in the prior year (125 in the Americas, 85 in Asia-Pacific, 55 in Japan, 43 in Europe and five in the UAE).

Tiffany management said it expects worldwide net sales for fiscal 2017 to be up over the prior year by a low-single-digit percentage.

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