Tiffany & Company (TIF - Analyst Report) 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.
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 - Analyst Report) , The Gap, Inc. (GPS - Analyst Report) and Foot Locker, Inc. (FL - Analyst Report) all of which carry a Zacks Rank #2 (Buy).