Sales at Tiffany & Company improved by 14% for the fiscal year ended January 31, 2011, but the jeweller has warned that reduced sales in Japan in the aftermath of the recent natural disaster will take a toll on 2012 forecasts.
On the back of a 14% growth in worldwide sales to $3.1 billion, Tiffany grew earnings by 39% to $368.4 million. In the fourth quarter specifically, global sales increased by 12% to $1.1 billion and earnings grew by 31% to $181.2 million.
Japan is such an important market for the luxury goods company that it breaks out Japan sales, which were up 7% over the previous year, separately from Asia-Pacific numbers, which drove sales growth with a 29% increase. The flagship Tiffany New York store in Manhattan, immortalised in the Audrey Hepburn movie Breakfast at Tiffany’s, registered a 6% sales growth.
Tiffany opened 15 new stores during the course of the year, of which seven are in Asia-Pacific (four in Beijing, Shanghai and Kunming; and one each in Seoul, Singapore and Taipei) and one in Japan. Greater China accounts for around half of Tiffany’s Asia-Pacific sales. Of the 233 stores Tiffany operates, 56 are in Japan and 52 in Asia-Pacific. For the next fiscal year ended January 31, 2012, Tiffany is forecasting that it will open 21 company-operated stores, of which eight will be in Asia-Pacific.
However, the recent tragedy in Japan has cast a shadow over Tiffany forecasts. Japan accounts for around 20% of Tiffany’s global sales and two Tiffany stores in the Kanto and Tohoku regions generate around half of Tiffany’s sales in Japan. It curtailed operations at both locations for some days after the disaster.
"In preparing our financial expectations for 2011, we have assumed some continued periodic store closings or limited store hours in Japan through the end of the first quarter, resulting in worldwide sales growth of 11% in the first quarter, with total Japan sales declining 15%,” said Michael Kowalski, Tiffany chief executive officer. The adverse impact on sales in Japan following the natural disaster has caused Tiffany to reduce its earnings per share estimate for the first quarter by five cents a share.
“We cannot provide meaningful forecasts about sales in Japan beyond the first quarter and, therefore, have not adjusted our sales or earnings plan for the remaining quarters of 2011,” added Kowalski.
On a consolidated basis Tiffany is forecasting worldwide sales growth of between 12% and 14% for the next fiscal year. Asia-Pacific is forecast to grow at least 20%, while Japan will register a mid-single digit percentage sales decline.
