Strong Chinese sales offset tepid Americas business for Tiffany

Tiffany's strong sales in China and higher prices helped mitigate disappointing business in its home market in the second quarter, leading the US jeweller to raise its profit forecast yesterday for the year.

Shares of Tiffany rose 2.2 per cent to $83.50 in trading before the market opened.

There were fears that luxury spending in China could slow, but Tiffany is the latest western brand to report good sales there.

But in the Americas, still Tiffany's biggest market, sales at stores open at least a year were unchanged, suggesting the company may have faced the same summer pullback by US shoppers that dented sales at chains ranging from Saks to Target.

Tiffany has struggled to find the right mix between the expensive statement jewellery it is famous for and more affordable silver items, typically less than $500, that generate 25 per cent of sales and comprise its most profitable category.

The company – the world’s second largest jewellery retailer – said global sales rose 4.4 per cent to $925.9 million in the second quarter to July 31st, below the $941.4 million analysts were expecting. Same-store sales climbed 5 per cent, in line with analysts’ estimates.

Brisk business in China fuelled a 13 per cent same-store sales gain in Asia outside Japan, well above estimates, which called for a 9 per cent increase.

Global net sales would have been up 8 per cent if not for the strong US dollar.

Tiffany still expects net sales worldwide to increase by a mid-single-digit percentage for the year, including the effect of the strong dollar.

Second-quarter net income rose to $106.8 million, or 83 US cents per share, from $91.8 million, or 72 cents per share, a year earlier.

The company now expects a profit of $3.50 to $3.60 per share for the full fiscal year, up seven cents from its previous forecast range. – (Reuters)