Luxury jewelry and specialty retailer Tiffany & Co. (TIF, Financial) reported its second-quarter financial results on Aug. 28, surpassing both revenue and earnings estimates.
Highlights of the second quarter
Tiffany’s earnings per share were $1.17, up 27% year over year. Revenue grew 12.6% to $1.08 billion. This includes an 8% increase in the U.S. and 28% gain in the Asia Pacific region. The company’s same-store sales grew 7% year over year after adjusting for foreign currency exchange rate fluctuations.
Sales were driven by increased spending by local customers as well as growth in its jewelry division.Â
The company’s selling, general and administrative expenses jumped 20%. Its gross margin was 64% due to lower commodity costs.
At the end of the quarter, the company had more than $800 million in cash and cash equivalents. Total short-term and long-term debt made up a combined 32% of shareholders' equity.
Strategic investments
Tiffany will also continue to invest in its operations, namely technology, marketing, digital, visual merchandising and store presentation, to generate future sales and earnings growth.
In a statement, CEO Alessandro Bogliolo commented on these plans.
"It's worth noting that strategic spending is increasing for the remainder for the year, as expected, which is intended to support longer-term sustainable growth."
Tiffany's is also planning to revamp and renovate its flagship store in Manhattan, which could, according to Bloomberg, cost the company approximately $250 million. Bogliolo said these investment plans and future growth prospects helped the company to generate solid sales growth in the second quarter. He is optimistic these strategic investments will drive growth in the future.
Guidance
The jewelry giant projects full-year earnings will range from $4.65 to $4.80 per share. Sales growth for the year is expected to in the high-single-digit percentage range. Cash flow from operations is anticipated to be roughly $600 million, which is down from its previous forecast of $700 million.
Disclosure: I do not hold any positions in the stocks mentioned in this article.
