Despite previous predictions of an earnings decline, Tiffany & Co recorded an increase in first quarter sales for the Asia-Pacific region at the same time that luxury goods group Richemont released “robust” results.
Total Asia-Pacific sales for Tiffany rose 4 per cent for the three months ended 30 April 2015 compared to the previous year, with same-store sales also increasing 2 per cent. Australia was one of the countries in this market that was said to have had “noteworthy” sales, along with China and Singapore; however, Hong Kong and Macau experienced “meaningful sales declines”.
Other regions reported mixed results: total sales in Europe increased 21 per cent; sales in the Americas lifted by a more modest 3 per cent; while Japan experienced a sales drop of 18 per cent.
Globally, company net sales fell 5 per cent to US$962 million (AU$1.3 billion). It was noted, however, that on a constant exchange rate basis excluding the impact of translating foreign currency into the US dollar, worldwide net sales increased 1 per cent, driven by increased sales of what Tiffany described as “fashion gold” jewellery and “statement” jewellery.
Net earnings also declined 17 per cent to US$105 million (AU$138 million), although this drop was significantly less than what was predicted in Tiffany’s 2015 forecast.
“We started the year facing well-known challenges from both global economic uncertainties and the effect of a strong US dollar on the translation of foreign-denominated sales into dollars and on foreign tourist spending in the US, as well as a difficult sales comparison in Japan,” Tiffany CEO Frederic Cumenal commented.
“Despite those factors, our first quarter results for net sales, as well as for gross margin and net earnings, were somewhat better than we anticipated,” he added.
Cumenal said highlights of the first quarter included the continued success of the Tiffany T jewellery collection and the launch of the CT60 watch collection. He also elaborated on plans for the coming year, which included expanding existing jewellery collections with new designs and opening more stores in “a number of important markets”.
“Despite these plans and the better-than-expected first quarter results, our forecast for minimal earnings growth for the full year continues to reflect caution regarding our expectations for fiscal 2015 in light of the strong dollar and other global economic uncertainties,” he noted. “However, we believe we can return to a healthier rate of double-digit EPS [earnings per share] growth over the long-term.”
Richemont, the parent company for luxury jewellery and watch brands such as Cartier and Piaget, also recently released its latest financial results for the year ended 31 March 2015.
Sales for the company increased 4 per cent to €10.4 billion (AU$14.9 b) compared to 2014, with operating profit also rising 10 per cent to €2.7 billion (AU$3.8 b).
Contributing to these figures was a 4 per cent increase in jewellery sales to €5.7 billion (AU$8.1 b) in what was described as a “challenging environment”.
“Jewellery sales were resilient, but overall demand for watch collections suffered due to a weak Asia-Pacific environment,” a Richemont statement explained. “Demand in western markets remained robust.”
The company’s “specialist watchmakers” division also experienced a rise in sales of 5 per cent to €3.1 billion (AU$4.5 b). “All Maisons [brands] showed robust growth, except for Piaget which has a large presence in the Asia-Pacific region,” the statement added.
In addition to Cartier and Piaget, Richemont is also the parent company for brands Giampiero Bodino, IWC Schaffhausen, Montblanc and Van Cleef & Arpels.