Luxury jeweler Tiffany & Co. (TIF: Quote) reported Tuesday a profit for the second quarter that grew 16 percent from last year, as China's elite showed an appetite for high-end jewelry.
Sales in Europe were also resilient despite lingering economic weakness across much of the region.
Earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.
The company also raised its earnings guidance for full-year 2013, citing better-than-expected earnings in the quarter, while maintaining its annual revenue growth outlook.
The New York-based world's second-largest luxury-jewelry retailer reported net earnings of $106.78 million or $0.83 per share for the first quarter, higher than $91.80 million or $0.72 per share in the prior-year quarter.
On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.74 per share for the quarter. Analysts' estimates typically exclude special items.
Worldwide net sales for the quarter increased 4 percent or 8 percent in constant currency, to $925.88 million from $886.57 million in the same quarter last quarter, but missed nineteen Wall Street analysts' consensus estimate of $941.37 million.
Worldwide comparable store sales rose 1 percent or 5 percent in constant currency, amid growth in most regions.
Sales rose 20 percent in the Asia-Pacific region, 11 percent or 10 percent in constant currency in the European region, and 2 percent in the Americas region. Meanwhile, sales declined 14 percent or increased 7 in constant currency, in Japan.
Gross margins for the quarter improved 120 basis points to 57.5 percent from last year's 56.3 percent, continuing to reflect a shift in sales mix toward higher-priced, lower gross margin products. Diminishing product cost pressure and price increases also aided margins.
"Total sales growth met our objective due to solid performance in most regions, and with particular strength in our statement and fine jewelry product categories. We were pleased with the results of our efforts to improve gross margin which, combined with well-controlled expenses, yielded a solid increase in operating margin," Chairman and CEO Michael Kowalski said in a statement.
Looking ahead to fiscal 2013, Tiffany raised its earnings guidance to a range of $3.50 to $3.60 per share from the prior forecast in the range of $3.43 to $3.53 per share. However the company continues to project worldwide net sales growth in a mid-single-digit percentage in U.S dollars, and a high-single-digit percentage on a constant-exchange-rate basis.
Street is currently looking for full-year 2013 earnings of $3.53 per share, on annual revenues of $4.05 billion.
Further, Tiffany is still planning to grow its global store base by adding net 14 company-operated stores by opening six in the Americas, seven in Asia-Pacific and three in Europe, as well as closing one each in Asia-Pacific and Japan.
"Looking forward, we are equally excited about the initiatives we are pursuing in product development, marketing communications and store expansion, all intended to further enhance Tiffany's strong brand position and take fuller advantage of its long-term growth opportunities in the global luxury market," Kowalski added.
TIF closed Monday's regular trading session at $81.67, down $0.67 on a volume of 2.02 million shares. In the past 52-week period, the stock has been trading in a broad range of $55.83 to $82.84.
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by RTT Staff Writer
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