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Home » Tiffany Posted Solid Q3 Results on Healthy Worldwide Sales Growth

Tiffany Posted Solid Q3 Results on Healthy Worldwide Sales Growth

Tiffany & Co. (NYSE: TIF), the New Yorked based jeweler and specialty retailer, today reported its Q3 2013 financial results for the period ending October 31, 2013. The company saw a very solid quarter with a healthy rate of worldwide sales growth of 7% and a faster earnings growth rate.

Gross margin was 57%, 2.6 points above last year and versus a 3.5-point decline in the same period last year. As was reported, the diminishing product cost pressures towards the end of 2012 turned into a tailwind in the second quarter of 2013 and are now contributing to the growth, which is expected to continue at least through year-end. But the product cost benefit in the quarter was offset in part due to the continuing shift in sales mix toward higher price point, lower gross margin products, including strong jewelry sales. All in all, the strong earnings growth in the third quarter led the company to forecast gross margin for the full year to be higher than last year’s 57%.

With regard to SG&A expense ratio, the company improved the ratio of SG&A expenses to sales by leveraging fixed costs and led the management to forecast an improved SG&A expense ratio for the full year. As a result of the improved gross margin and SG&A expense ratio, earnings from operations rose 31% in the quarter on a 7% sales increase.

So with virtually everything moving in a favorable direction led the company to increase its full year forecast. For the fiscal year ending January 31, 2014, the company is forecasting earnings per diluted share of $3.65 to $3.75, which does not include $0.05 per diluted share of expenses tied to specific cost-reduction initiatives that were recorded in the first quarter, compared to last year’s $3.25 per share. This forecast is based on the following assumptions: mid-single-digit worldwide sales growth in dollars or high single-digit growth in local currency; comp store sales growth in local currencies ranging from low-double digits in Asia-Pacific in Japan to mid-single digits in Europe and low-single digits in the Americas.

In terms of inventories, net inventories were $2.4 billion at October 31, 2013 which was 6% higher than a year ago. For the full year, inventory is forecast to increase by 5% in dollar terms.

Accounts receivable on October 31, 2013 were 3% above last year, largely attributable to worldwide sales growth and are turning at more than 20 times per year.

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