On a constant-exchange-rate basis, net sales rose a smaller 11%, and worldwide comparable store sales rose 4%. Net earnings increased 9% to $40.1 million, or 27 cents per diluted share, from $36.8 million, 25 cents per share.
U.S. retail sales increased 14% to $243.4 million, with most growth coming from the amount spent per transaction. "There was solid unit increases in engagement and other higher-price jewelry," says vice president of investor relations Mark Aaron. "From a price stratification perspective, we were pleased to see sales and transaction growth in every price strata, with even a single digit increase in the entry-level strata below $500. However, the most meaningful growth was in diamond jewelry at higher price levels."
Comparable store sales rose 11%, both for the company's flagship New York store (most sales growth came from tourist) and branch locations. Four stores have opened in the past year and are not counted in the comparable store sales, and four more are scheduled to open in 2005.
International retail sales of $190.3 million are 3% higher than last year. On the constant-exchange-rate basis, sales rose just 1%, and comparable store sales declined 6%. A 10% decline in the depressed Japanese market was balanced with a 5% increase for the Asia-Pacific region outside Japan, and a 3% decline in Europe. The weak dollar is leading some European shoppers to make their Tiffany purchases in American stores, Aaron says.
"Sales in Japan remained below our expectations, but we will continue to focus our managerial, marketing and merchandising resources on that market," says Michael J. Kowalski, chairman and CEO of Tiffany. Four stores in Japan with Tiffany's boutiques closed in the past year, explaining some of the decline. Net earnings are predicted to be $1.45-$1.55 per share for 2005, Kowalski says.
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