People are highly cost conscious and are willing to spend only on the basic necessities, such as food. This trend has continued for the last few years when the U.S. was hit by recession. However, this does not seem to be the case when performances of some premium retailers are looked into.
A typical example of such a luxury retailer is Tiffany (TIF, Financial) which has performed remarkably well in its latest quarter despite harsh winter conditions which has hampered sales at most of the stores. The numbers beat Street’s expectations, sending its share price north.
Analyzing therein
Driven by increase in product prices, revenue surged 13% to $1.01 billion over last year’s quarter. Same store sales also increased by 11% as more and more people flocked into its stores. Also, it opened 4 new stores during the quarter, which added to the top line.
Not only diamonds and silver jewelry witnessed growing demand, but also products such as fine and statement jewelry experienced a jump in sales. Items such as colored diamonds were some of the customer favorites, which resonated well with shoppers.
Although the chilled weather kept customers away from stores for some time, occasions such as Valentine’s Day brought customers in hordes. Additionally, Tiffany’s new lower cost collection, called Atlas Collection, was one of the key drivers which attracted cost conscious people. Moreover, these low cost collections provided higher margins.
Japan was a bright spot with a 20% increase in revenue. The region witnessed higher demand mainly because of new tax which was levied from April onwards. Therefore, customers shopped more in March, leading to higher sales. However, revenue from other regions also jumped. Americas registered 8% growth, Asia Pacific was at 17% and Europe was at 9%.
The jeweler performed well on the bottom line also wherein its earnings climbed 50% to $0.97 per share, over the prior year’s quarter. Also, gross margin expanded to 58.2% from 56.2% last year.
Points to note
Tiffany has some plans to further improvise its performance. For instance, it has plans to expand its business in Japan, where it has been experiencing growing sales. Also, it plans to bring in the new collection in the months to come. This should lure more customers to its stores.
Additionally, the jeweler’s efforts to market its products have been fruitful. Its efforts into visual merchandising in its stores, events such as Blue Book in April have been contributing well to its overall revenue.
In fact, the company expects to perform even better during the year. Therefore, it raised its guidance for the year. It increased its earnings outlook to a range of $4.15 per share and $4.25 per share, quite higher than the outlook of $4.05 per share to $4.15 per share. This came as a great delight to investors and made them hopeful about the company’s future. Moreover, the retailer estimates its revenue to increase in high single digit range.
The bottom line
Tiffany has been an exemplary performer and has been registering growth in each passing quarter. It has grown its presence by adding new stores steadily. Moreover, its new collections as per customers’ tastes and preferences have proved to be quite fruitful. Therefore, Tiffany makes for a great bet, especially with a great outlook to look forward to.
