of luxury jeweler Tiffany & Co (TIF 123.11, +20.87, +20.41%) trade to all-time highs today due, in part, to better than expected
first quarter earnings and sales, a raise to the fiscal year 2018 earnings
guidance, and a new buyback program.
All told, first quarter earnings came to $1.14 per share while revenues grew nearly to $1.03 bln which was 15% more than last year with comparable sales up 10%. Gross margin increased to 63.0% from 62.1% in the prior year, largely reflecting sales leverage on fixed costs and the reduction in wholesale sales of diamonds.
On a constant exchange rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales and comparable sales rose 11% and 7%, respectively.
Results were strong across most geographic areas, specifically in the Americas and Asia-Pacific. In the Americas total net sales were up 9% to $425 mln and comparable sales rose 9%. Sales increased across the region attributed to higher spending by local customers and foreign tourists. On a constant exchange rate basis, total sales and comparable sales increased 8% and 9%, respectively.
In Asia-Pacific, total net sales rose 28% to $329 mln due to increased retail sales in Greater China and most other markets, as well as higher wholesale sales in Korea; comparable sales rose 14%. On a constant-exchange-rate basis, total sales and comparable sales increased 23% and 9%, respectively.
In Japan, total net sales rose 17% to $151 mln and comparable sales rose 14%. On a constant exchange rate basis, total sales and comparable sales were 12% and 9%, respectively, above the prior year. In Europe, total net sales increased 13% to $107 mln, which largely reflected the positive effects from currency translation, as well as new stores; comparable sales rose 2%. On a constant exchange rate basis, total sales increased 1%, while comparable sales declined 9% due to softness across much of the region, which management attributed to lower spending by foreign tourists as well as negative effects from new stores on existing store sales.
Management also raised fiscal 2018 EPS to a range of $4.50-4.70 from $4.25-4.45 on expectations for worldwide net sales to increase by a high-single-digit percentage over the prior year both as reported and on a constant exchange rate basis.
Tiffany’s Board of Directors also approved a new share repurchase program that authorizes the repurchase of up to $1.0 bln of the company’s Common Stock through open market transactions. This new program, which expires on January 31, 2022, will replace the company’s existing share repurchase program announced in January 2016. Under this new program, the company’s Board of Directors also approved the repurchase of $250 mln of the company’s Common Stock through an accelerated share repurchase transaction which the company expects to enter into during its fiscal quarter ending July 31, 2018, subject to market conditions.
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