Tiffany 3Q grew over 50% YoY!
Tiffany & Co reported its financial results for the three months and nine months ended October 31, 2020. In the third quarter, worldwide net sales returned to the billion dollar level and represented a decrease of 1% as compared to the prior year; on a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales for the three months were 2% below the prior year.
Net earnings increased 52% for the third quarter as compared to prior year (73% improvement when excluding certain costs related to the Merger (as defined below); reflecting higher gross and operating margins and a lower effective income tax rate. In the year-to-date, worldwide net sales decreased 25% as compared to the same period in the prior year and, on a constant-exchange-rate basis, decreased 24% in the nine months as compared to the prior year. Net earnings turned positive in the year-to-date.
Alessandro Bogliolo, Chief Executive Officer, said, “We had a strong third quarter both in sales on a relative basis and terrific results in profitability on an absolute basis, which speaks volumes about the enduring strength of the Tiffany brand and gives us confidence as we enter the important holiday season. I want to commend all our invaluable managers and extraordinary employees for the excellent results achieved in a very, very difficult environment.
“We believe that the results we released demonstrate that our strong continuing execution against the strategic priorities we set three years ago positions us to achieve sustainable sales, margin and earnings growth for this legendary brand. Further to continued management focus and investment in that important market, sales in Mainland China continued to grow dramatically in the third quarter, increasing by over 70%, with comparable sales nearly doubling in that period as compared to the prior year.
In addition, and consistent with our focus, e-commerce sales finished the third quarter up 92% globally as compared to the prior year, performing positively in all markets. As a result, total e-commerce sales represent 12% of total net sales in the year-to-date, as compared to 6% for each of the last three fiscal years.
Finally, we saw an increase in another important metric – average unit retail price – in the third quarter in response to our strategic initiatives designed to focus consumers on our finest products, both online and in our stores. Absolutely noteworthy is the performance of T1, our newest gold and gold with diamonds collection, which was received particularly well in all markets and channels.”
Mr. Bogliolo closed by saying, “We look forward to surprising and delighting our consumers during the holiday season and the successful completion of the merger transaction with LVMH in early 2021.”
Mark Erceg, Chief Financial Officer added, “We believe that expanding operating margins by nearly 500 basis points in the third quarter as compared to the prior year and posting exceptionally strong net earnings growth against an extremely difficult macroeconomic backdrop demonstrates the strength and durability of the Tiffany brand, as well as the considerable skill and dedication of Tiffany’s management, craftspeople and sales professionals.
By being very thoughtful and deliberate about cost management and capex spending, we were able to continue funding important strategic growth investments, like the renovation of our Fifth Avenue flagship store in New York City, finish the third quarter with ample liquidity from our cash-on-hand and unused borrowing capacity and, once again, remain in full compliance with our leverage ratio financial maintenance covenant and our fixed charge coverage ratio test for debt incurrence.”