Despite the dull momentum in the retail world these days, upscale jeweler Tiffany’s
While combined online and catalog sales domestically inched up just 1%, the top line surged 38% in Europe and 21% in Asia. Even as same-store sales plowed ahead 16% in the company’s flagship New York store, foreign tourist spending (taking advantage of our weak dollar) saved the day. In total, revenue growth was a shimmering 12.2%.
With the wholesale price of diamonds trending downward, the company was able to see gross margins expand to 57.1% (from 56.1%). Tiffany’s was also able to leverage its fixed costs, thanks to strong sales overseas. And although selling, general & administrative costs paced faster than sales growth, the end result was an impressive 19% increase in net income. Throw in a healthy share-buyback program, and diluted earnings jumped 28.2%, well ahead of what analysts were expecting.
Despite the surprisingly strong near-term results, management is staying cautious for the year, as consumers feel the pinch from record high gas, food, and other commodity prices. It held firm on previous projections, calling for full-year sales growth of 10% and earnings of $2.80-$2.90, which would still be a nice bump from the $2.20 it reported last year.
Shares of Tiffany are bumping up against $50 per share on the glistening earnings figures, which puts the price-to-sales at just under 2, a premium to bricks-and-mortar rivals such as Zales
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