Tiffany Profits Soar With Strength in Asia
Tiffany & Co. continued to bounce back in the third quarter with a big boost from China setting the business up for its next chapter as part of LVMH Moët Hennessy Louis Vuitton.
Net earnings rose 52 percent to $119 million, or 98 cents a share, from $78 million, or 65 cents, a year earlier.
The results are far stronger than projected by analysts, who had penciled in earnings of 66 cents a share.
And excluding $16.5 million in costs related to the merger with LVMH — which devolved into a messy legal battle and was renegotiated for a lower price — Tiffany’s earnings increased 73 percent to $136 million, or $1.11.
Last year, the Bernard Arnault-led LVMH agreed to buy Tiffany for $135 a share, but then tried to exit the deal in September, citing a variety of reasons, including the company’s performance, only to eventually renegotiate for $131.50.
Sales for the three months ended Oct. 31 slipped by 1 percent to $1 billion and rose 3 percent on a comparable basis. E-commerce sales — all the more important in a time of social distancing — shot up 92 percent.
Tiffany’s relative top-line strength flowed from the Asia-Pacific region, which saw 30 percent sales growth to $382 million, driven by growth in mainland China and South Korea. Japan, which is broken out separately from the region, saw sales fall 8 percent to $156 million.
The bounce back in Asia was offset by a 16 percent drop in the Americas, to $354 million, and a decline of 6 percent in Europe, to $104 million.
Alessandro Bogliolo, chief executive officer, said: “We had a strong third quarter both in sales on a relative basis and terrific results in profitability on an absolute basis, which speaks volumes about the enduring strength of the Tiffany brand and gives us confidence as we enter the important holiday season.
“The results we released today demonstrate that our strong continuing execution against the strategic priorities we set three years ago positions us to achieve sustainable sales, margin and earnings growth for this legendary brand,” Bogliolo said. “Further to continued management focus and investment in that important market, sales in Mainland China continued to grow dramatically in the third quarter, increasing by over 70 percent, with comparable sales nearly doubling in that period as compared to the prior year.”
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