Shares of Tiffany & Co. (TIF) are gaining more than six percent in early deals on Tuesday after the luxury jeweler reported first quarter earnings that significantly topped analysts' expectations.
Profit for the quarter grew 3 percent from last year, despite high precious metal and diamond costs continuing to eat away at margins.
Worldwide sales increased amid improvements across the company's operating regions. The company also maintained its earnings and revenue growth guidance for the full-year 2013.
"We are pleased with this start to the year. Worldwide, first quarter sales exceeded our expectations, enabling us to improve our sales leverage on fixed expenses and achieve earnings growth. In addition, we celebrated Tiffany's 175th anniversary with our very successful Blue Book event and promotional activities surrounding the debut of the film The Great Gatsby, for which we designed the jewelry," Chairman and CEO Michael Kowalski said in a statement.
The New York-based world's second-largest luxury-jewelry retailer reported net earnings of $83.58 million or $0.65 per share for the first quarter, higher than $81.53 million or $0.64 per share in the prior-year quarter.
Excluding $0.05 per share of expenses related to cost reduction initiatives, adjusted net earnings for the latest quarter was $89.36 million or $0.70 per share.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the quarter. Analysts' estimates typically exclude special items.
Worldwide net sales for the quarter increased 9 percent or 13 percent in constant currency, to $895.48 million from $819.17 million in the same quarter last quarter, and topped seventeen Wall Street analysts' consensus estimate of $855.14 million.
Worldwide comparable store sales rose 4 percent or 8 percent in constant currency.
Sales rose 15 percent or 14 percent in constant currency in Asia-Pacific region, 6 percent or 8 percent in constant currency in Europe, 6 percent in the Americas, and 2 percent or 20 percent in constant currency in Japan.
However, gross margins fell to 56.2 percent from 57.3 percent a year ago, reflecting a shift in sales mix toward higher-priced, lower gross margin products.
"While first quarter sales and earnings exceeded our expectations, we are maintaining our earnings forecast for the full year, mindful of continuing soft sales results in the Americas and the negative translation effect of a weaker yen," Kowalski added.
Looking ahead to fiscal 2013, Tiffany continues to expect earnings in a range of $3.43 to $3.53 per share, on projected 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 2012 earnings of $3.48 per share, on annual revenues of $4.04 billion.
The company also anticipates net earnings in the second quarter to be equal to the prior-year quarter, on expected mid-single-digit sales increase, with earnings growth projected n the third and fourth quarters.
Further, Tiffany is planning to grow its global store base by adding net 14 company-operated stores, and will launch a redesigned website later this year.
TIF closed Friday's regular trading session at $76.21, up $0.50 on a volume of 1.42 million shares. In the past 52-week period, the stock has been trading in a broad range of $49.72 to $79.35.
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