Tiffany’s third-quarter earnings beat estimates as same-store sales returned to positive territory in the Americas but showed weakness in Europe and the Asia-Pacific region.
In the first full quarter under new CEO Alessandro Bogliolo, the upscale jeweler on Wednesday reported that worldwide net sales increased 3% to $976 million and net earnings increased 5% to $100 million, or $0.80 per share, from $95 million, or $0.76 per share, a year ago.
Analysts on average had expected Tiffany to post a profit of 76 cents per share and revenue of $957 million.
Comparable sales in the Americas rose 1% after six straight quarters of declines. But worldwide comp sales fell 1% as declines of 3% and 8% in Europe and Japan, respectively, offset the improvement in the Americas. Analysts had forecast a 0.02% drop in worldwide comp sales.
“These latest financial results marginally exceeded our expectations, but I believe that Tiffany has the medium- to long-term potential to achieve meaningful comparable store sales growth and drive higher operating margins and earnings growth,” Bogliolo said in a news release.
Tiffany said sales had been boosted by “higher demand for cheaper fashion jewelry and high-end diamond pendants and rings.”
As Reuters reports, the company, “whose diamond engagement rings were popular with baby boomers, has been diversifying its offerings, adding fashion jewelry such as silver alloy bracelets to its portfolio to cater to price-conscious millennials.”
“The point is that Tiffany is trying something new and is grabbing the attention of shoppers,” Neil Saunders, managing director at GlobalData Retail, said, adding that the greater emphasis on fashion and designer collections has attracted younger consumers to its stores while the urban Tiffany HardWear range is also resonating with a wider audience.
But SeekingAlpha expressed concern at Tiffany’s weak sales in Europe and the Asia-Pacific region. “Tiffany’s results show high volatility across regions and not a clear path toward a clear improvement,” it said.
In Asia-Pacific, strong growth in mainland China contrasted with declines in most other countries, which Tiffany attributed largely to lower Chinese tourist spending.