Tiffany & Company (TIF) posted better-than-expected first-quarter fiscal 2013 results due to surge in demand in the Asia-Pacific region. The quarterly earnings of 70 cents a share surpassed the Zacks Consensus Estimate of 53 cents, and rose 9.4% from 64 cents in the prior-year quarter.
Shares of Tiffany were up 5.9% or $4.50 to $80.71 during pre-market trading hours.
Let’s Unveil the Picture
Tiffany posted net sales of $895.5 million during the quarter, up 9% from the prior-year quarter, on the heels of healthy performance of stores in the Americas, Asia-Pacific and Europe regions and due to new collection launches. Total revenue also outdid the Zacks Consensus Estimate of $862 million. In constant currencies, net sales jumped 13%, whereas comparable-store sales climbed 8%.
By geographic segment, sales in the Americas grew 6% to $408 million, while comps increased 3% during the quarter; sales in the Asia-Pacific region climbed 15% to $223 million, whereas comps increased 9%; sales in Japan inched up 2% to $145 million and comps grew 3%; and sales in Europe jumped 6% to $93 million and comps increased 4%. Other sales nearly surged threefold to $27 million.
In constant currencies, sales in the Americas rose 6%, whereas comps increased 3% during the quarter; sales in the Asia-Pacific region grew 14%, whereas comps rose 9%; sales in Japan advanced 20%, while comps grew 21%; and sales in Europe climbed 8%, whereas comparable-store sales climbed 6%.
Gross profit for the quarter increased 7.3% to $503.2 million, however, gross margin contracted 110 basis points to 56.2% due to lower margin products.
Stores Update
Tiffany opened 1 outlet during the quarter and shuttered one. The company plans to add net 14 stores in fiscal 2013 with 6 in the Americas, 7 in Asia-Pacific, 3 in Europe and closing 1 location each in Japan and Taiwan.
As of April 30, 2013, the company operated 275 stores (115 in the Americas, 66 in Asia-Pacific, 55 in Japan, 34 in Europe and 5 in the U.A.E.).
Other Financial Details
Tiffany ended the quarter with cash and cash equivalents of $464.9 million, and total short-term and long-term debt of $974.1 million, reflecting 37% of shareholders equity compared with 35% in the prior-year. Management forecasted capital expenditures of approximately $230 million and free cash flow of $300 million for fiscal 2013.
Strolling Through Guidance
Tiffany continues to project fiscal 2013 earnings between $3.43 and $3.53 per share, reflecting year-over-year growth of 6% to 9%. However, management expects second quarter earnings in line with the prior-year quarter. The current Zacks Consensus Estimates for the second quarter and fiscal 2013 are 78 cents and $3.46 per share.
Tiffany now expects total net sales growth in mid-single digit for fiscal 2013. In constant currencies, total net sales are projected to increase in the high-single-digit. For the second too sales are expected to increase in mid-single digit.
Tiffany currently has a Zacks Rank #3 (Hold). Other retail stocks that look promising and are expected to continue with their upbeat performance include Lululemon Athletica Inc. (LULU), The Gap, Inc. (GPS) and Foot Locker, Inc. (FL) all of which carry a Zacks Rank #2 (Buy).
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