Tiffany & Co. (NYSE: TIF) reported Q2 EPS of $0.84, $0.12 better than the analyst estimate of $0.72. Revenue for the quarter came in at $932 million versus the consensus estimate of $934.74 million.

Constant-currency comps fell 9.0 percent, versus a drop of 7.1 percent expected.

Net sales by region were as follows:

• In the Americas, total sales of $434 million in the second quarter and $837 million in the first half were both 9% below last year, with declines of 9% and 10%, respectively, in comparable store sales. On a constant-exchange-rate basis, total sales and comparable store sales declined 8% and 9%, respectively, in both the second quarter and first half. Management attributed the declines to lower spending by U.S. customers as well as by Chinese and other foreign tourists.
• In the Asia-Pacific region, total sales of $230 million in the second quarter and $469 million in the first half were 6% and 7%, respectively, lower than the prior year, and comparable store sales declined 12% and 13%, respectively. On a constant-exchange-rate basis, total sales and comparable store sales declined 3% and 9%, respectively, in the second quarter and 4% and 11%, respectively, in the first half. Sales growth in China and Korea was offset by a continuation of significant declines in Hong Kong and more moderate declines in most other markets.
• In Japan, total sales increased 10% to $138 million in the second quarter and rose 9% to $269 million in the first half due to comparable store sales growth of 13% and 12%, respectively. However, on a constant-exchange-rate basis, total sales and comparable store sales declined 5% and 3%, respectively, in the second quarter and declined 2% and rose 1%, respectively, in the first half. Management noted lower spending by Chinese tourists in both periods.
• In Europe, total sales declined 12% to $111 million in the second quarter and 11% to $208 million in the first half, due to respective declines of 17% and 16% in comparable store sales. On a constant-exchange-rate basis, total sales and comparable store sales declined 8% and 13%, respectively, in the second quarter and 7% and 13%, respectively, in the first half. Lower sales in continental Europe were attributed by management to weak demand by foreign tourists and local customers, in contrast to better performance in the United Kingdom.
• Other sales declined 3% to $18 million in the second quarter and 20% to $40 million in the first half, reflecting comparable store sales declines of 22% and 21%, respectively. Management noted lower retail sales in the United Arab Emirates (“UAE”) and an increase in wholesale sales of diamonds.
• Tiffany opened four Company-operated stores in the second quarter and closed one existing location. At July 31, 2016, the Company operated 311 stores (125 in the Americas, 83 in Asia-Pacific, 55 in Japan, 43 in Europe, and five in the UAE), compared with 304 stores a year ago (124 in the Americas, 79 in Asia-Pacific, 56 in Japan, 40 in Europe, and five in the UAE).

Guidance:

Tiffany & Co. reaffirmed FY2016 guidance. Management also expects for the full 2016 fiscal year: (i) net cash provided by operating activities of at least $660 million and (ii) free cash flow (net cash provided by operating activities less capital expenditures) of at least $400 million. These expectations are also based on the Company’s plans and assumptions, including: (i) net inventories unchanged from the prior year, (ii) capital expenditures of $260 million and (iii) net earnings in line with management’s expectations as described above.

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