Tiffany’s Q2 results in line with expectations

Tiffany & Co reported its financial results for the second

quarter ended July 31, 2012 and also announced that the results were in line with company’s expectations. During the three months of second quarter, company’s net earnings rose 2 percent to 92 million dollars (Rs 512 crores) or 0.72 dollars (Rs 40) per diluted share as compared to 90 million dollars (Rs 501 crores) or 0.69 dollars (Rs 38.4) per diluted share in 2011's second quarter.

Tiffany’s worldwide net sales were reported to have increased by 2 percent to 887 million dollars (Rs 4,943 crores) from last year. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales increased 3 percent and comparable store sales declined 1 percent.

For the six months period ended July 31, 2012, company’s net earnings increased 1 percent to 173 million dollars (Rs 964 crores), or 1.36 dollars (Rs 75.7) per diluted share, from 171 million dollars (Rs 953 crores), or 1.32 dollars (Rs 73.5) per diluted share, a year ago. Its worldwide net sales increased 4 percent to 1.7 billion dollars (Rs 9,474 crores). On a constant-exchange-rate basis, worldwide net sales and comparable store sales rose 5 percent and 1 percent respectively.

Due to higher production costs as well as reduced sales leverage on fixed costs, company’s gross margin (gross profit as a percentage of net sales) were reported as 56.3 percent in the second quarter and 56.8 percent in the first half, compared with 59 percent and 58.7 percent in the respective 2011 periods. The effective income tax rate was 34.6 percent in the second quarter, versus 31.2 percent a year ago when the company had reversed a valuation allowance against certain deferred tax assets. The effective rate was 34.5 percent in the first half, versus 33.4 percent a year ago.

At July 31, 2012, the company ended its cash and cash equivalents and short-term investments with a total of 367 million dollars (Rs 2,045 crores), compared to 565 million dollars (Rs 3,149 crores) a year ago. Short-term and long-term debt totaled 940 million dollars (Rs 5,239 crores) and represented 39 percent of stockholders' equity, compared with 694 million dollars and 29 percent in the previous year.

For the full year ending January 31, 2013, management expects net earnings of 454 dollars - 473 million dollars (Rs 2, 530 or Rs 2, 636 crores), or 3.55 dollars - 3.70 dollars (Rs 197.8 or Rs 206.2) per diluted share, compared with the previous forecast of 3.70 dollars -3.80 dollars (Rs 197.8 or 211.7) per diluted share.

Tiffany & Cooperates jewellery stores and manufactures products through its subsidiary corporations. Its principal subsidiary is Tiffany and Company. The Company operates TIFFANY & CO. retail stores in the Americas, Asia-Pacific, Japan, Europe and the United Arab Emirates, and also engages in direct selling through Internet, catalog and business gift operations.