Jewelry retailer Tiffany & Co. (NYSE:TIF) early Tuesday posted much better than expected third quarter earnings results and reiterated its full-year outlook.
The New York City-based company reported Q3 net income of $0.76 per share, which was $0.09 better than the Wall Street consensus estimate of $0.67. Revenues rose 1.2% from last year to $949 million, easily topping analyst estimates for $922.52 million.
Comparable store sales fell 2% in the latest period. Comparable sales, also known as same-store sales or simply “comps,” are considered a key indicator of a retailer’s health, since they measure the year-over-year performance of stores open at least 12 months.
Tiffany noted that gross margins in the third quarter were 61.0%, and 61.4% on a year-to-date basis. Those numbers compare favorably to the 60.2% seen in Q3 of 2015 and 59.7% year-to-date through last year’s third quarter. TIF said the margin gains were due to lower product input costs, a better product mix, and price increases.
Looking ahead, Tiffany reiterated its prior full-year 2016 outlook for worldwide net sales to fall by a low single-digit percentage from last year, with earnings per share declining by a mid-single-digit percentage.
The company commented via press release:
“We are encouraged by some early signs of improvement in sales trends, but we clearly need more positive data over time before this can be considered an inflection point. In this recent quarter, we saw a smaller sales decline in the U.S. from earlier this year, while Asia-Pacific results reflected strong growth in mainland China and a relatively smaller decline in Hong Kong. Our business in Japan performed well which we attribute to spending by domestic consumers, but we believe the strengthening of the yen has negatively impacted purchases by Chinese consumers. We also saw relative strength in UK sales, but a continuation of softness on the European continent.”
Tiffany shares rose $1.86 (+2.38%) to $80.00 in premarket trading Tuesday. Year-to-date, TIF has gained 2.42%, versus an 8.15% rise in the benchmark S&P 500 index during the same period.