By Phil Wahba
NEW YORK (Reuters) - Tiffany & Co
Tiffany's sales gains were strong across the board during the quarter ended July 31, a period that includes the Mother's Day and bridal seasons, which are second in sales only to the end-of-year holidays for jewelers.
Chief Executive Stephen Kowalski said that sales so far in the current quarter are outpacing Tiffany's own forecasts despite continuing economic uncertainty.
The company said it expects sales to rise by a high teen percentage for the year ending in late January, up from a previous forecast of a mid-teen percentage increase.
At its flagship store on Manhattan's Fifth Avenue, where it gets about a tenth of its business, sales rose 41 percent, helped by international tourists.
In Asia, outside of Japan, revenue rose 45 percent excluding the effect of a weak dollar, thanks to the appetite of China's emerging middle class for Western luxury brands.
Sales also rose by double digits in Europe, where wealthy Russian and Chinese tourists account for as much as a quarter of total luxury spending by some estimates. Sales also rebounded in Japan, which is still recovering from the debilitating earthquake and tsunami in March.
Overall, Tiffany sales, excluding the effect of currency translations, rose 24 percent to $872.7 million in the second quarter, while sales at stores open at least one year rose 22 percent.
Tiffany said its gross margins rose 1.2 percentage points to 59 percent of sales, with revenue increasing enough for the retailer to absorb higher costs for gold, diamonds and silver.
Tiffany's price increases, which faced little consumer resistance, have "a recipe for success," Wall Street Strategies analyst Brian Sozzi said in a note.
Signet Jewelers Ltd
The price increases and strong sales helped Tiffany handily beat Wall Street's profit forecasts. It reported net income of $90 million, or 69 cents per share, for the quarter, up from $67.7 million, or 53 cents per share, a year earlier.
Excluding one-time items, such as the cost of relocating its New York staff to new offices, Tiffany earned 86 cents a share, far above the 70 cents Wall Street expected, according to Thomson Reuters I/B/E/S.
Tiffany raised its full-year profit outlook range by 20 cents, to between $3.65 and $3.75 per share, above the $3.56 analysts were expecting.
Tiffany shares rose $3.39 to $66.50 in pre-market trading. Through Thursday's close, Tiffany shares had fallen 25.3 percent since hitting an all-time high on July 7, on concerns that market volatility might prompt luxury spenders to pull back.
(Editing by Derek Caney, John Wallace and Steve Orlofsky)