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High-end jeweller Tiffany has increased its full-year earnings forecast following a commendable first quarter of trading
Tiffany upbeat after first-quarter results
Posted May 31, 2011 | By Sonia Nair
High-end jeweller Tiffany & Co increased its earnings forecast for the full year of 2011 after higher-than-expected net sales and earnings growth in its first quarter.
Tiffany’s worldwide net sales increased by 20 per cent from the same period last year to US$761 million ($717.2 million) and its net earnings increased by 26 per cent to US$81.1 million ($76.4 million).
Tiffany chairman and chief executive Michael J. Kowalski said the first-quarter results signalled a very strong start to the year.
“We achieved healthy sales growth in most regions, were able to improve gross margin despite higher product costs and achieved a significant increase in our operating margin,” Kowalski said.
Like Pandora, Tiffany has also been forced to increase prices to address the higher costs of gold, silver, platinum and diamonds.
Vice-president of investor relations Mark Aaron said, “We have addressed it by raising retail prices – not uniformly, but based on the cost components of individual products.”
Asia Pacific in particular experienced the largest leap in sales with a 37 per cent increase from last year to US$167.2 million ($156.3 million). Tiffany attributed the strong performance in Asia Pacific to “growth in most countries and especially in the greater China region”.
Sales in Europe soared 25 per cent, sales in the Americas (including US, Canada and Latin America) increased 19 per cent and sales in Japan increased 7 per cent, despite the fact that Tiffany was forced to temporarily close down several stores affected by the Japanese earthquake.
Kowalski said Tiffany’s worldwide sales growth in the early part of its second quarter continues to defy expectations, and that the company had exciting plans lined up for the rest of 2011.
“We will open 19 new stores, introduce a broad range of compelling new products and will increase our spending on marketing communications,” Kowalski said.
Of the 19 new stores, eight will be in Asia Pacific although there will be no new store openings in Australia this year. There are currently two Tiffany stores in Melbourne, one in Sydney, one in Brisbane and one in Perth.
Tiffany partners with CFDA and Vogue
Tiffany has donated US$1million ($943,000) to the Fashion Fund – a collaboration between non-profit trade organisation Council of Fashion Designers of America and Vogue.
The donation signals the start of a three-year partnership with the Fashion Fund to help support emerging talent.
The collaboration includes a one-time US$250,000 ($235,627) business development grant, which will be awarded to the CFDA/Vogue Fashion Fund jewellery designer alumna who best demonstrates his or her ability to develop their designs as an independent entity.
Submissions for the grant will be judged by an influential panel including industry luminaries such as editor in chief of Vogue Anna Wintour, senior accessories editor of Vogue Filipa Fino and Tiffany chief executive, Kowalski, will review the submissions.
Kowalski said the CFDA and Vogue collaboration was a key step to promote jewellery as an important field of design.
“As a leader in the jewellery industry, it is important to us that the next generation of talented jewellery designers are able to succeed in the face of the many business challenges they face,” he said.
More reading:
Tiffany's 2010 sales exceed expectations
Tiffany scoops Grazia's jewellery retail award
Tiffany sues more counterfeit jewellery sites
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