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August 27, 2014 3:49 pm
Tiffany & Co has raised its profit forecast for the second time in less than six months, after sparkling second-quarter sales in the Americas and Asia Pacific boosted the US luxury jeweller’s earnings by 16 per cent.
Shares in Tiffany rose 1 per cent by close of trading after it raised its 2014 earnings guidance to between $4.20 and $4.30 a share.
The revised expectations, up from its previous forecast of $4.15 to $4.25 a share, were attributed to a 7 per cent surge in total global sales to $993m. Consumers have responded positively to revamped stores and product offerings, particularly to the group’s gold-focused and wedding collections, the company said.
Buoyant demand allowed Tiffany to raise prices, lifting its gross margin from 57.5 to 59.9 per cent.
In the Americas, same-store sales – a key measure for retailers – jumped 8 per cent in the quarter to July 31. In Asia-Pacific, they climbed 7 per cent, with demand from consumers particularly strong in China and Australia.
The group added that its strong performance in those regions had more than offset weaker than expected sales in Europe, with a strong pound and euro and slowing tourist traffic in core cities such as London. In Japan, sales tumbled 16 per cent, although this was expected following the country’s sales tax increase that took effect on April 1.
“The business is in pretty good shape, with healthy returns emerging from management’s decision to elevate its brand positioning and establishing a bigger presence in new growth markets – despite an ongoing dependence on the Americas,” said Rahul Sharma, analyst at Neev Capital.
“They appear to be on track for a good holiday season,” he added.
Last month chief executive Michael Kowalski announced his retirement after 15 years at the group, passing the baton to president Frederic Cumenal.
He will step down on March 31. Mr Cumenal, 54, was the former chief executive of Moët & Chandon and was initially poached from LVMH in 2011 to oversee worldwide sales distribution for the retailer known for its light blue boxes and striking Fifth Avenue flagship store in New York.
The company has undergone a wider management reshuffle in the past 12 months, appointing a chief financial officer, Ralph Nicoletti, and design director Francesca Amfitheatrof. It has also been focusing on tighter inventory control, international expansion and a more upscale product mix as it expands its luxury clientele base across age groups and geographies.
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