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Tiffany beats Street on Q1 earnings, misses on sales; will open 8 stores

Tiffany & Co. partially met Wall Street expectations in a first quarter that might be described as “rocky.”

Tiffany reported worldwide net sales of $1 billion during the first quarter of fiscal 2019, down 3% from $1.03 billion in the first quarter of fiscal 2018 and short of Wall Street analyst projections. Net earnings were $125.2 million, a 12% year-over-year decrease from $142.3 million. However, earnings per share (EPS) beat analyst predictions at $1.03, although down from $1.14 the first quarter of fiscal 2018.

Global same-stores sales fell 3%. On a regional basis, same-store sales dropped 4% in the Americas, 5% in Asia-Pacific, 4% in Japan, 7% in Europe, and 17% in the United Arab Emirates (UAE). During the fiscal year, Tiffany’s plans eight store openings, six closings, and 15 relocations.

Alessandro Bogliolo, CEO of Tiffany, cited unfavorable exchange rates and reduced tourism revenues in discussing the retailer’s first quarter performance.

“Our first quarter results reflect significant foreign exchange headwinds and dramatically lower worldwide spending attributed to foreign tourists,” said Bogliolo. “That said, we were pleased that, at the core of our business, global sales attributed to local customers, led by sales in China, grew over last year’s very strong sales results. We believe this growth in sales to local customers reflects progress in executing our strategic priorities, including innovations across products, communications and the customer experience, and that Tiffany is positioned for improving trends in the second half of 2019.”

Tiffany opened two company-operated stores in the first quarter, closed two stores and relocated two stores. As of April 30, 2019, the company operated 321 stores (124 in the Americas, 89 in Asia-Pacific, 56 in Japan, 47 in Europe and five in the UAE), compared to 314 stores a year ago.

For fiscal 2019, Tiffany expects worldwide net sales to increase by a low-single-digit percentage over the prior year; net earnings per diluted share increasing by a low-to-mid-single-digit percentage; and a continued expectation for a decline in net earnings per diluted share in the second quarter of the year.
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