Tiffany & Co. (TIF) Misses Q3 EPS by 1c; Maintains Guidance

Tiffany & Co. (NYSE: TIF) reported Q3 EPS of $0.76, $0.01 worse than the analyst estimate of $0.77. Revenue for the quarter came in at $960 million versus the consensus estimate of $970 million.Tiffany & Co. reaffirmed FY2014 guidance.

Michael J. Kowalski, chairman and chief executive officer, said, “We were pleased with overall sales performance, especially in light of economic and geopolitical challenges around the world. We continue to pursue exciting opportunities in marketing, merchandising and store expansion to support longer-term growth, and are especially encouraged with initial results from the recent launch of our TIFFANY T jewelry collection.”

Net sales highlights by region were as follows:

• In the Americas, total sales increased 10% to $459 million in the third quarter and 9% to $1.38 billion in the year-to-date. On a constant-exchange-rate basis, total sales increased 11% and 10% in the third quarter and year-to-date, respectively, due to geographically-broad-based growth across the region, and comparable store sales rose 11% and 9% in the respective periods.
• Total Asia-Pacific sales rose 2% to $243 million in the third quarter and 11% to $741 million in the year-to-date. On a constant-exchange-rate basis, total sales increased 2% in the third quarter reflecting noteworthy sales growth in mainland China that was mostly offset by mixed performance across other markets, and rose 11% in the year-to-date due to sales growth in most markets. Comparable store sales on that constant-exchange-rate basis declined 3% in the quarter and rose 5% in the year-to-date.
• Total sales in Japan declined 12% to $113 million in the third quarter (or a 5% decline on a constant-exchange-rate basis), and declined 1% to $406 million in the year-to-date (but rose 5% on a constant-exchange-rate basis). Management attributes the soft demand to weaker economic conditions after a surge in consumer spending before an increase in Japan’s consumption tax on April 1st. Comparable store sales on a constant-exchange-rate basis declined 6% in the quarter and rose 4% in the year-to-date.
• In Europe, total sales rose 9% to $114 million in the third quarter and 9% to $336 million in the year-to-date. On a constant-exchange-rate basis, total sales rose 10% and 5% in the quarter and year-to-date, respectively; on that constant-exchange-rate basis, comparable store sales increased 2% in the quarter due to strength in continental Europe, and declined 3% in the year-to-date.
• Other sales increased 28% to $30 million in the third quarter and 32% to $101 million in the year-to-date. The increases reflected comparable store sales growth of 35% and 17%, respectively, and retail sales in the first Company-operated TIFFANY & CO. store in Russia, which opened in February.
• During the third quarter, Tiffany opened a freestanding store in Tokyo; it has opened six stores in the year-to-date. At October 31, 2014, the Company operated 294 stores (122 in the Americas, 72 in Asia-Pacific, 56 in Japan, 38 in Europe, five in the United Arab Emirates and one in Russia), versus the prior year’s 283 stores (120 in the Americas, 68 in Asia-Pacific, 54 in Japan, 36 in Europe and five in the U.A.E.).

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