Tiffany & Co raised its full-year forecast for the second consecutive quarter after its latest results beat analysts’ earnings estimates amid growing Asia-Pacific spending on its trademark diamonds.
Shares in the world’s second-largest jeweller by sales climbed 7.5 per cent to $87.11 in response – capping a 38 per cent share price rise over the year – as it boasted of improved operating margins in the third quarter.
The group reported net earnings had surged 50 per cent to $95m, or 73 cents a share, on a diluted basis, in the quarter, well above the $74.9m, or 49 cents per share, predicted by Wall Street. Overall sales rose 7 per cent to $911m, also better than the $889m expected by analysts.
In the Asia-Pacific region, sales soared 27 per cent to $238m, with the company capitalising on booming demand for its coloured diamond and fashion jewellery ranges by expanding its store network across the region.
“Our growth in the Asia-Pacific is both consistent and extremely broad-based, extending well beyond China to include Singapore, South Korea and Australia,” said Mark Aaron, Tiffany’s vice-president of investor relations.
“Appetite from Chinese travellers, especially in Taiwan, Hong Kong and Macau is driving sales but we see ongoing opportunity and growing brand awareness across the entire region.”
The company is benefiting from Chinese customers growing interest in diamond jewellery over the traditional preference for gold in gift-giving.
Sales in the Americas and Europe increased by 4 per cent and 7 per cent respectively, thanks to slightly higher unit prices and increased interest in its fine jewellery.
Francesca Amfitheatrof, who was appointed as Tiffany’s design director in September, was immersed in reinvigorating the weaker performing lower priced fashion jewellery collections for 2014, the group said.
Tiffany’s third-quarter gross margin increased to 57 per cent, up from 54 per cent a year ago, which the retailer attributed to reduced product cost pressures combined with price rises earlier in the year. The results were also helped by a lower tax rate for the quarter of 32 per cent against 38 per cent the year before.
The company raised its full-year net earnings forecast for the fiscal year ending on January 31 to a range of between $3.65 and $3.75 per share. In its previous guidance, issued in August, the company had predicted earnings per share of between $3.50 and $3.60.
“This is a big beat for Tiffany and these results show that the upscale shopper continues to power on globally,” noted Rahul Sharma, analyst at Neev Capital.
“Overall hard luxury industry trends continue to indicate that branded high-end jewellery – particularly in largely unbranded Asia – continues to be a sweet spot for western retailers.”
Get alerts on Luxury goods when a new story is published