NEW YORK — Tiffany & Co. managed to eke out a 1 percent gain in first-quarter profits, beating Wall Street expectations despite a 3 percent sales decline.
For the three months ended April 30, the upscale jewelry retailer earned $30.76 million, or 20 cents per share. That compares with $30.42 million, or 20 cents per share in the year-ago period.
The results included a pretax gain of $5.25 million, based on Tiffany’s equity interest in Aber Diamond Corp. and a pretax charge of $1.6 million related to the company’s adoption of new accounting rules.
Excluding those charges, Tiffany’s first-quarter net earnings would have been $28.6 million, or 19 cents per share.
Analysts polled by Thomson Financial/First Call expected 18 cents per share.
Tiffany posted overall sales of $336.4 million, compared to $345.14 million a year ago. On a constant exchange rate basis, net sales rose 2 percent over 2000, and worldwide sales at stores opened at least a year, known as same-store sales, declined 2 percent.
Same-store sales are considered the best indicator of a retailer’s health.
Michael J. Kowalski, president and chief executive officer, said the results “were, not surprisingly, impacted by external conditions that affected customers’ average spending levels and that are in sharp contrast to the robust retail environment of a year ago.”
In the first quarter, Tiffany’s U.S. sales fell 6 percent to $159 million, from $169.76 million in the year-ago period. Same-store sales declined 8 percent, after posting a 28 percent gain in the year-ago period.
Kowalski said same-store sales for the first two weeks in the second quarter have improved slightly, but remain below the prior year. The company added that if the trend continues, second-quarter net earnings could approach last year’s level. The consensus estimate by Thomson Financial is 25 cents per share. Last year, in its second quarter, Tiffany earned 26 cents per share.
Tiffany’s goal is for mid-to-high single-digit gains in U.S. same-store sales in the second half.
There is much room for improvement. At Tiffany’s flagship in Manhattan, same-store sales dropped 15 percent in the first quarter. Branch stores experienced a 6 percent decline.
The company’s international sales declined 1 percent for the first quarter to $146.42 million, from $147.4 million in the year-ago period. On a constant exchange rate basis, international sales rose 9 percent, and same-store sales rose 6 percent in Japan, 2 percent in other Asia-Pacific markets and 13 percent in Europe.
One of the few sparkling areas of Tiffany’s business was its direct marketing division, whose sales rose 11 percent to $30.96 million in the first quarter. That compared with $27.93 million a year ago.
Corporate sales rose 8 percent and catalog and Internet revenues gained 15 percent.
Shares of Tiffany rose 39 cents to close at $34.08 on the New York Stock Exchange.
