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Tiffany's 1Q sales up, but U.S. market weak

June 2008

Tiffany and Co. worldwide sales for the first quarter ended April 30 rose 12 percent to $668.1 million, with strong growth in the Asia-Pacific and European regions compensating for weaker U.S. results, the company announced recently.

On a constant-exchange-rate basis, net sales and comparable-store sales rose 8 percent and 3 percent, respectively.

Total sales for the Americas, including the United States, Canada and South America, increased six percent to $373.6 million, versus $353.3 million in the prior year, due to incremental sales from new stores, a company press release said. U.S. same-store sales for the quarter were the same as last year, with a 16 percent rise at Tiffany's flagship store in New York, thanks to a flurry of foreign tourists lured by the weak U.S. dollar, and a four percent decline in branch store sales. Catalog and Internet sales in the U.S. market grew 1 percent.

Sales in the Asia-Pacific region, which includes Japan, other Asia-Pacific countries outside Japan and the Middle East, grew 21 percent to $222 million from $183.1 million for the same quarter in 2007. With exchange rates held constant, sales rose 10 percent and comparable-store sales went up 4 percent, reflecting strong growth in all Asia-Pacific countries other than Japan, Tiffany and Co. said.

European sales grew 38 percent to $60.1 million, versus $43.5 million in the first quarter of 2007. On a constant-exchange-rate basis, sales were up 30 percent, thanks to 12 percent comparable-store sales growth and incremental sales from four new stores, the release said.

“We are pleased to start the year with sales and earnings growth above our expectations,” Michael Kowalski, chairman and chief executive officer, said in the release. “A 12 percent increase in worldwide sales, despite only modest growth in the U.S. due to challenging conditions, reflects the benefit of globally-diversified distribution.”

Other sales fell 21 percent to $12.4 million, from $15.7 million a year ago, due to reduced wholesale sales of diamonds made in connection with the company's diamond-sourcing program.

Tiffany and Co. operated 192 stores and boutiques as of April 30, (81 in the Americas, 93 in the Asia-Pacific region and 18 in Europe), compared with 171 (74, 83 and 14 in those respective regions) a year ago.

Kowalski said the company is continuing to pursue important expansion opportunities in 2008 and expect to open approximately 24 stores across the United States, as well as in the Asia-Pacific region and Europe. Plans are also on to introduce a new, smaller store format in the United States later this year.

“We believe Tiffany is well-positioned to gain market share in this competitively-demanding environment,” Kowalski said.

The retailer expects the challenges in the U.S. market to continue.

“We are maintaining a cautious outlook for U.S. sales and do not expect an improvement until later this year,” Kowalski said. “Worldwide sales performance in May-to-date is meeting our expectation which, consistent with the first quarter pattern, reflects strength in markets throughout Asia-Pacific (other than Japan) and Europe more than offsetting softness in U.S. sales. We remain on track to achieve our full-year growth expectations.”

Source: Nationaljeweler.com, www.nationaljeweler.com