US Sales Remain Strong At Signet Jewelers While UK Sales Disappoint

Signet Jewelers, the largest specialty retail jeweler in the US and the UK, said Thursday that second-quarter year-over-year sales increased 3.1 percent to $880.2 million. Same store sales for the period increased 3.6 percent year-over-year while eCommerce sales grew 7 percent to $31.2 million.

This was offset by a 1.2 percent decline in net income to $67.4 million. During a conference call Thursday, Mike Barnes, Signet CEO, said the decline was primarily due to the costs associated with the acquisition of the Ultra outlet jewelry store chain and the conversion of many of them to Zale Outlet stores, and lower gross margins compared to other Signet holdings. Without Ultra, earnings per share were up 5.9 percent.

In the company’s US division, which now accounts for nearly 85 percent of total sales for the company, sales increased 5.6 percent to $741.1 million. Same store sales increased 4.9 percent for the period. Sales increases were driven by strength in bridal, colored diamonds and watches. Signet owns 1,449 jewelry retail stores that operate under the brand-names Kay, Jared, Kay Outlet stores, Ultra and stores and some regional brands.

Kay and Jared experienced increases in both transaction counts and average transaction value. Meanwhile, eCommerce sales increased 36 percent to $25.3 million.

In the UK division, total sales declined 8.5 percent to $139.1 million in the second quarter. Same store sales decreased 2.4 percent. The company said the sales decline was primarily due to a same store sales decrease of $3.4 million, the impact of closed stores of $5.6 million and currency fluctuation of $3.9 million. Signet owns 500 retail stores that operate under the H.Samuel and Ernest Jones names.

The company said that at Ernest Jones, the number of transactions increased driven primarily by strength in branded bridal and watches, excluding Rolex, and the average transaction value was lower, primarily due to the impact from Rolex being offered in fewer stores. In H.Samuel, the number of transactions declined, primarily due to store closures and lower traffic. This resulted in lower sales across many merchandise categories, partly offset by strength in branded bridal products. Sales in both businesses were impacted by lower bead transactions. UK eCommerce sales in the UK increased 5.4 percent to $5.9 million, which include 45 percent coming to the websites through mobile devices, Barnes said.

Barnes noted during the conference call that Signet is in the process of updating its websites and mobile presence to take advantage of the increased traffic.

Other second quarter highlights:

* Gross margin declined, falling to $309.7 million or 35.2 percent of sales, compared to $311.2 million or 36.4 percent of sales in the second quarter fiscal 2013. The includes the results for Ultra increased gross margin dollars by $5.7 million; however, it reduced the consolidated gross margin rate by 50 basis points and the US gross margin rate by 70 basis points. The Ultra gross margin is lower than the core US business due to lower Ultra store productivity and the impact of the Ultra integration.

* Gross margin dollars in the US increased by $1.3 million compared to second quarter of fiscal 2013, reflecting higher sales offset by a gross margin decrease of 180 basis points. The company said the lower gross margin was primarily attributed to a gross merchandise margin decrease by 50 basis points, attributed to Ultra; and store occupancy and operating costs deleveraged by 70 basis points, of which 40 basis points was due to Ultra. The remaining 30 basis point change was due to the increase of new store openings.

* The US net bad debt ratio increased to 4.9 percent of sales compared to 4.5 percent of sales in prior year second quarter. The increase in the ratio was primarily due to the growth in the outstanding receivable balance. In addition, the US division experienced a “slight decline in collection efficiency” and a change in the credit mix. In the UK, gross margin dollars decreased $2.8 million, primarily reflecting the impact of decreased sales and currency fluctuation offset by a gross margin rate increase of 40 basis points.
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* Selling, general and administrative expenses increased 4.2 percent to $250.5 million. As a percentage of sales, SGA increased by 40 basis points to 28.5 percent. This includes the results for Ultra, which increased SGA by $13.5 million and increased the consolidated SGA rate by 70 basis points. The company said Ultra’s SGA is expected to decline as the final steps of the integration are completed.

* Operating income fell 4.9 percent to $105.5 million. Operating margin declined 100 basis points to 12 percent.

* The US division’s operating income including Ultra declined 4.9 percent to $111.5.

* Operating margin for the US division including Ultra was 15 percent, compared with 16.7 percent in fiscal 2013, down 170 basis points. Excluding Ultra, the US division’s operating income was $119.3 or 16.8 percent of sales, up 10 basis points.

In its guidance, the company said it expects same store sales to rise in the low-single digit for the third quarter.

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Signet Jewelers, the largest specialty retail jeweler in the US and the UK, said Thursday that second-quarter year-over-year sales increased 3.1 percent to $880.2 million. Same store sales for the period increased 3.6 percent year-over-year while eCommerce sales grew 7 percent to $31.2 million.

This was offset by a 1.2 percent decline in net income to $67.4 million. During a conference call Thursday, Mike Barnes, Signet CEO, said the decline was primarily due to the costs associated with the acquisition of the Ultra outlet jewelry store chain and the conversion of many of them to Zale Outlet stores, and lower gross margins compared to other Signet holdings. Without Ultra, earnings per share were up 5.9 percent.

In the company’s US division, which now accounts for nearly 85 percent of total sales for the company, sales increased 5.6 percent to $741.1 million. Same store sales increased 4.9 percent for the period. Sales increases were driven by strength in bridal, colored diamonds and watches. Signet owns 1,449 jewelry retail stores that operate under the brand-names Kay, Jared, Kay Outlet stores, Ultra and stores and some regional brands.

Kay and Jared experienced increases in both transaction counts and average transaction value. Meanwhile, eCommerce sales increased 36 percent to $25.3 million.

In the UK division, total sales declined 8.5 percent to $139.1 million in the second quarter. Same store sales decreased 2.4 percent. The company said the sales decline was primarily due to a same store sales decrease of $3.4 million, the impact of closed stores of $5.6 million and currency fluctuation of $3.9 million. Signet owns 500 retail stores that operate under the H.Samuel and Ernest Jones names.

The company said that at Ernest Jones, the number of transactions increased driven primarily by strength in branded bridal and watches, excluding Rolex, and the average transaction value was lower, primarily due to the impact from Rolex being offered in fewer stores. In H.Samuel, the number of transactions declined, primarily due to store closures and lower traffic. This resulted in lower sales across many merchandise categories, partly offset by strength in branded bridal products. Sales in both businesses were impacted by lower bead transactions. UK eCommerce sales in the UK increased 5.4 percent to $5.9 million, which include 45 percent coming to the websites through mobile devices, Barnes said.

Barnes noted during the conference call that Signet is in the process of updating its websites and mobile presence to take advantage of the increased traffic.

Other second quarter highlights:

* Gross margin declined, falling to $309.7 million or 35.2 percent of sales, compared to $311.2 million or 36.4 percent of sales in the second quarter fiscal 2013. The includes the results for Ultra increased gross margin dollars by $5.7 million; however, it reduced the consolidated gross margin rate by 50 basis points and the US gross margin rate by 70 basis points. The Ultra gross margin is lower than the core US business due to lower Ultra store productivity and the impact of the Ultra integration.

* Gross margin dollars in the US increased by $1.3 million compared to second quarter of fiscal 2013, reflecting higher sales offset by a gross margin decrease of 180 basis points. The company said the lower gross margin was primarily attributed to a gross merchandise margin decrease by 50 basis points, attributed to Ultra; and store occupancy and operating costs deleveraged by 70 basis points, of which 40 basis points was due to Ultra. The remaining 30 basis point change was due to the increase of new store openings.

* The US net bad debt ratio increased to 4.9 percent of sales compared to 4.5 percent of sales in prior year second quarter. The increase in the ratio was primarily due to the growth in the outstanding receivable balance. In addition, the US division experienced a “slight decline in collection efficiency” and a change in the credit mix. In the UK, gross margin dollars decreased $2.8 million, primarily reflecting the impact of decreased sales and currency fluctuation offset by a gross margin rate increase of 40 basis points.
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* Selling, general and administrative expenses increased 4.2 percent to $250.5 million. As a percentage of sales, SGA increased by 40 basis points to 28.5 percent. This includes the results for Ultra, which increased SGA by $13.5 million and increased the consolidated SGA rate by 70 basis points. The company said Ultra’s SGA is expected to decline as the final steps of the integration are completed.

* Operating income fell 4.9 percent to $105.5 million. Operating margin declined 100 basis points to 12 percent.

* The US division’s operating income including Ultra declined 4.9 percent to $111.5.

* Operating margin for the US division including Ultra was 15 percent, compared with 16.7 percent in fiscal 2013, down 170 basis points. Excluding Ultra, the US division’s operating income was $119.3 or 16.8 percent of sales, up 10 basis points.

In its guidance, the company said it expects same store sales to rise in the low-single digit for the third quarter.

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Pandora Jewelry Q2 Revenue Up 53%

Pandora charm bracelet

Danish jewelry company, Pandora, continues its comeback that began to show promise earlier this year with a year-over-year 53 percent increase in revenue to 1.9 billion kroner ($343 million) for the second quarter of 2013. Net income rose 22 percent for the period to 431 million kroner ($76.5 million).

The company did note that comparable figures for the second quarter of 2012 were impacted by the company’s stock balancing campaign conducted in 2012, where it replaced unwanted products after demand collapsed two years ago.

The international company known for its charm jewelry and silver jewelry posted robust double-digit sales growth in all regions where it operates:

• Americas increased by 52.1 percent (54.3% increase in local currency)
• US increased 53.9 percent (55.6% increase in local currency)
• Europe increased by 59.3 percent (59.8% increase in local currency)
• Asia Pacific increased by 43.5 percent (42.4% increase in local currency)

Gross profit for the quarter increased 49 percent to 1.27 billion Danish kroner ($225 million). This corresponds to a gross margin of 66 percent, compared to 67.9 percent in the second quarter of 2012 and 65.6 percent in the first quarter of 2013. The company said the decrease in gross margin was primarily due to the expiration of the suspension of import duties on goods from Thailand (where the company manufactures its jewelry) into the U.S. “The increase in the gross margin compared to Q1 2013, was due to a decrease in commodity prices,” the company said.

EBITDA for the second quarter increased by 140.9 percent to 530 million Danish kroner ($94.1 million) resulting in an EBITDA margin of 27.4 percent, compared to 17.5 percent in the same period of the prior year. 

Pandora—which designs, manufacturers, markets and sells its jewelry wholesale and retail—said its volumes increased by 40 percent year-over-year and the average sales price increased nearly 9 percent.

On 30 July 2013, Pandora is sticking to an upgrade in its financial guidance, first announced July 30, to 8 billion kroner ($1.42 billion), compared with its previous guidance of 7.2 billion kroner and expects an EBITDA margin of approximately 27 percent, up two points from its previous guidance.

The company also plans to increase the number of its popular “concept stores” that it plans to open for the year, from 150 to 175.

“The solid performance reported for Q1 2013 has continued across all major markets in the second quarter, with strong sales from newly launched products, high replenishment rates and healthy sell-out from the concept stores,” said Allan Leighton, Pandora CEO. “Our strategy of delivering affordable luxury is becoming increasingly relevant, and although there are still many areas in which we can improve we are pleased with our progress.”

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Pandora charm bracelet

Danish jewelry company, Pandora, continues its comeback that began to show promise earlier this year with a year-over-year 53 percent increase in revenue to 1.9 billion kroner ($343 million) for the second quarter of 2013. Net income rose 22 percent for the period to 431 million kroner ($76.5 million).

The company did note that comparable figures for the second quarter of 2012 were impacted by the company’s stock balancing campaign conducted in 2012, where it replaced unwanted products after demand collapsed two years ago.

The international company known for its charm jewelry and silver jewelry posted robust double-digit sales growth in all regions where it operates:

• Americas increased by 52.1 percent (54.3% increase in local currency)
• US increased 53.9 percent (55.6% increase in local currency)
• Europe increased by 59.3 percent (59.8% increase in local currency)
• Asia Pacific increased by 43.5 percent (42.4% increase in local currency)

Gross profit for the quarter increased 49 percent to 1.27 billion Danish kroner ($225 million). This corresponds to a gross margin of 66 percent, compared to 67.9 percent in the second quarter of 2012 and 65.6 percent in the first quarter of 2013. The company said the decrease in gross margin was primarily due to the expiration of the suspension of import duties on goods from Thailand (where the company manufactures its jewelry) into the U.S. “The increase in the gross margin compared to Q1 2013, was due to a decrease in commodity prices,” the company said.

EBITDA for the second quarter increased by 140.9 percent to 530 million Danish kroner ($94.1 million) resulting in an EBITDA margin of 27.4 percent, compared to 17.5 percent in the same period of the prior year. 

Pandora—which designs, manufacturers, markets and sells its jewelry wholesale and retail—said its volumes increased by 40 percent year-over-year and the average sales price increased nearly 9 percent.

On 30 July 2013, Pandora is sticking to an upgrade in its financial guidance, first announced July 30, to 8 billion kroner ($1.42 billion), compared with its previous guidance of 7.2 billion kroner and expects an EBITDA margin of approximately 27 percent, up two points from its previous guidance.

The company also plans to increase the number of its popular “concept stores” that it plans to open for the year, from 150 to 175.

“The solid performance reported for Q1 2013 has continued across all major markets in the second quarter, with strong sales from newly launched products, high replenishment rates and healthy sell-out from the concept stores,” said Allan Leighton, Pandora CEO. “Our strategy of delivering affordable luxury is becoming increasingly relevant, and although there are still many areas in which we can improve we are pleased with our progress.”

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Swatch Group Sees Strong Growth Potential For Harry Winston

The Harry Winston salon in Paris.

The Swatch Group has big plans for the recently acquired Harry Winston brand, finding it an asset that is both complimentary and with plenty of room for growth.

The Swiss conglomerate on Tuesday for the first time partly revealed what it plans for the luxury retail brand during its earnings report for the first half of the year. The company, which now owns 20 watch and jewelry brand, said that gross sales for the period increased 8.7% year-over-year to 4.18 billion Swiss francs ($4.47 billion). Net income increased 6.1% compared to the first half of 2012 to 768 million Swiss franc ($821,700), with a 19.2% return on net sales. Sustained growth was reported in all regions.

“The continued integration of the Harry Winston brand will … make a significant contribution, as this brand has huge, almost untapped market potential in the high jewelry and watches activities,” the company said, adding that this potential will start to be seen in the second half of the fiscal year.

Swatch Group said that following its $1 billion acquisition of Harry Winston in March, the conglomerate invested in infrastructure, settled all debts, expanded its equity capital base and increase inventory. “The latter was initiated in order to ensure that our clientele has access to the best selection of jewelry as well as to increase its availability,” Swatch Group said in its earnings statement.

“The acquisition of the Harry Winston brand did more than simply round off the group’s already broad brand portfolio; it also expanded the high jewelry segment, along with the segment’s value chain from production up to and including the retail network,” Swatch added.

In May, Swatch Group, in Harry Winston’s name, purchased a 101.73-carat diamond at auction for $26.7 million and renamed it the “Winston Legacy,” explaining that it “reconfirms the number one position of this high jewelry brand.”

Swatch says that its see the luxury watch segment of the brand as having the best potential for worldwide growth.

“The Harry Winston brand has an extremely large and almost untapped potential in the watch sector, which the group now aims to expand further using its experience around the world,” the company said. “The necessary funds will also be invested into this activity.”

In fact, the acquisition led to some company restructuring by integrating the production division into the watches and jewelry business unit. “This integration will also provide a more uniform view of activities, facilitating comparability with our competitors.”

Other highlights of the company’s first-half report include:

• Benchmarked to the 1.5% export growth for wristwatches of the Swiss watch industry in the first half of 2013, the segment Watches & Jewelry (now including production) growth was more than 9%.

• An operating profit of 910 million Swiss francs ($973,500) was recorded, with an operating margin of 22.7%, despite a high marketing spend, important investments in products and production methods, and the integration of Harry Winston.

The company said its outlook “remains very promising,” expecting a strong second half. 

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

The Harry Winston salon in Paris.

The Swatch Group has big plans for the recently acquired Harry Winston brand, finding it an asset that is both complimentary and with plenty of room for growth.

The Swiss conglomerate on Tuesday for the first time partly revealed what it plans for the luxury retail brand during its earnings report for the first half of the year. The company, which now owns 20 watch and jewelry brand, said that gross sales for the period increased 8.7% year-over-year to 4.18 billion Swiss francs ($4.47 billion). Net income increased 6.1% compared to the first half of 2012 to 768 million Swiss franc ($821,700), with a 19.2% return on net sales. Sustained growth was reported in all regions.

“The continued integration of the Harry Winston brand will … make a significant contribution, as this brand has huge, almost untapped market potential in the high jewelry and watches activities,” the company said, adding that this potential will start to be seen in the second half of the fiscal year.

Swatch Group said that following its $1 billion acquisition of Harry Winston in March, the conglomerate invested in infrastructure, settled all debts, expanded its equity capital base and increase inventory. “The latter was initiated in order to ensure that our clientele has access to the best selection of jewelry as well as to increase its availability,” Swatch Group said in its earnings statement.

“The acquisition of the Harry Winston brand did more than simply round off the group’s already broad brand portfolio; it also expanded the high jewelry segment, along with the segment’s value chain from production up to and including the retail network,” Swatch added.

In May, Swatch Group, in Harry Winston’s name, purchased a 101.73-carat diamond at auction for $26.7 million and renamed it the “Winston Legacy,” explaining that it “reconfirms the number one position of this high jewelry brand.”

Swatch says that its see the luxury watch segment of the brand as having the best potential for worldwide growth.

“The Harry Winston brand has an extremely large and almost untapped potential in the watch sector, which the group now aims to expand further using its experience around the world,” the company said. “The necessary funds will also be invested into this activity.”

In fact, the acquisition led to some company restructuring by integrating the production division into the watches and jewelry business unit. “This integration will also provide a more uniform view of activities, facilitating comparability with our competitors.”

Other highlights of the company’s first-half report include:

• Benchmarked to the 1.5% export growth for wristwatches of the Swiss watch industry in the first half of 2013, the segment Watches & Jewelry (now including production) growth was more than 9%.

• An operating profit of 910 million Swiss francs ($973,500) was recorded, with an operating margin of 22.7%, despite a high marketing spend, important investments in products and production methods, and the integration of Harry Winston.

The company said its outlook “remains very promising,” expecting a strong second half. 

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Tiffany Reports Strong Sales Growth in All Regions

Tiffany &Co. said Tuesday that worldwide net sales increased 9% year-over-year to $895 million for the first quarter of 2013. On a constant-exchange-rate basis, which excludes foreign currency fluctuations, worldwide net sales increased 13% and comparable store sales rose 8%. 

Sales growth was seen in all regions for the international luxury retailer and would have been even stronger if it was not for the unusually weak Japanese yen. 

Net earnings increased 3% to $84 million, or $0.65 per diluted share. Expenses of $9 million, or $0.05 per diluted share, were recorded in the quarter for recent staff and occupancy reductions; excluding those costs, net earnings increased 10% to $89 million, or $0.70 per diluted share. 

In addition, the company maintained its fiscal 2013 forecast of net earnings in a range of $3.43-$3.53 per diluted share. The New York-based company expects that worldwide net sales will increase by a mid-single-digit percentage in U.S dollars and a high-single-digit percentage increase on a constant-exchange-rate basis. 

"First quarter sales exceeded our expectations, enabling us to improve our sales leverage on fixed expenses and achieve earnings growth, said Michael J. Kowalski, Tiffany chairman and CEO. “In addition, we celebrated Tiffany's 175th anniversary with our very successful Blue Book event and promotional activities surrounding the debut of the film The Great Gatsby, for which we designed the jewelry." 

Kowalski added, "We are maintaining our earnings forecast for the full year, mindful of continuing soft sales results in the Americas and the negative translation effect of a weaker yen…. Tiffany's global store base is growing this year with a planned net addition of 14 stores, and we will be launching our redesigned website later this year." 

Net sales by region are as follows: 

* In the Americas, total sales rose 6% to $408 million. Comparable store sales rose 3% with relatively stronger growth in the New York flagship store. Sales in New York was aided from purchases by customers who attended the Blue Book event. 

* In the Asia-Pacific region, total sales increased 15% to $223 million. On a constant-exchange-rate basis, total sales increased 14%, due to sales growth in Greater China and most other countries. Comparable store sales rose 9%. 

* Sales in Japan increased 2% to $145 million despite a negative translation effect from a weakening yen. On a constant-exchange-rate basis, total sales increased 20% and comparable store sales rose 21% due to particularly strong growth in Tiffany's engagement and higher-end jewelry categories.

* In Europe, total sales increased 6% to $93 million due to sales growth across continental Europe. On a constant-exchange-rate basis, total sales and comparable store sales rose 8% and 6% respectively.

*Other sales tripled to $27 million from $9 million in the prior year, primarily reflecting the conversion in July 2012 of five Tiffany stores in the United Arab Emirates from independently-operated to company-operated. 

In the first quarter, Tiffany opened one store, in Xi'an, China and closed one in Taichung, Taiwan. The Company currently operates approximately 275 stores (115 in the Americas, 66 in Asia-Pacific, 55 in Japan, 34 in Europe and five in the U.A.E.), compared with 251 stores (105 in the Americas, 59 in Asia-Pacific, 55 in Japan and 32 in Europe) a year ago. 

Tiffany said it plans to add a net of 14 company-operated stores (opening six in the Americas, seven in Asia-Pacific and three in Europe, and closing one each in Japan and Taiwan), as well as refurbishing a number of existing locations around the world. 

Gross margin (gross profit as a percentage of net sales) was 56.2% versus last year's 57.3%. The company said this was expected as it reflects a shift in sales mix toward higher-priced, lower gross margin products. 

Selling, general and administrative expenses (SG&A) increased 8% in the quarter due to  $9 million of expenses tied to cost reduction initiatives related to staffing reductions, as well as subleasing of office space at a loss, the company said. Excluding those costs, SG&A expenses would have increased 6% due to new store-related costs and higher marketing spending for the Blue Book event. 

Net inventories were $2.3 billion at April 30, 2013, or 4% higher than a year ago, the company said. A 12% increase in finished goods inventories to support new store openings and expanded product assortments was partly offset by a 5% decline in combined raw material and work-in-process inventories. On a constant-exchange-rate basis, net inventories were 7% higher than a year ago.

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Tiffany &Co. said Tuesday that worldwide net sales increased 9% year-over-year to $895 million for the first quarter of 2013. On a constant-exchange-rate basis, which excludes foreign currency fluctuations, worldwide net sales increased 13% and comparable store sales rose 8%. 

Sales growth was seen in all regions for the international luxury retailer and would have been even stronger if it was not for the unusually weak Japanese yen. 

Net earnings increased 3% to $84 million, or $0.65 per diluted share. Expenses of $9 million, or $0.05 per diluted share, were recorded in the quarter for recent staff and occupancy reductions; excluding those costs, net earnings increased 10% to $89 million, or $0.70 per diluted share. 

In addition, the company maintained its fiscal 2013 forecast of net earnings in a range of $3.43-$3.53 per diluted share. The New York-based company expects that worldwide net sales will increase by a mid-single-digit percentage in U.S dollars and a high-single-digit percentage increase on a constant-exchange-rate basis. 

"First quarter sales exceeded our expectations, enabling us to improve our sales leverage on fixed expenses and achieve earnings growth, said Michael J. Kowalski, Tiffany chairman and CEO. “In addition, we celebrated Tiffany's 175th anniversary with our very successful Blue Book event and promotional activities surrounding the debut of the film The Great Gatsby, for which we designed the jewelry." 

Kowalski added, "We are maintaining our earnings forecast for the full year, mindful of continuing soft sales results in the Americas and the negative translation effect of a weaker yen…. Tiffany's global store base is growing this year with a planned net addition of 14 stores, and we will be launching our redesigned website later this year." 

Net sales by region are as follows: 

* In the Americas, total sales rose 6% to $408 million. Comparable store sales rose 3% with relatively stronger growth in the New York flagship store. Sales in New York was aided from purchases by customers who attended the Blue Book event. 

* In the Asia-Pacific region, total sales increased 15% to $223 million. On a constant-exchange-rate basis, total sales increased 14%, due to sales growth in Greater China and most other countries. Comparable store sales rose 9%. 

* Sales in Japan increased 2% to $145 million despite a negative translation effect from a weakening yen. On a constant-exchange-rate basis, total sales increased 20% and comparable store sales rose 21% due to particularly strong growth in Tiffany's engagement and higher-end jewelry categories.

* In Europe, total sales increased 6% to $93 million due to sales growth across continental Europe. On a constant-exchange-rate basis, total sales and comparable store sales rose 8% and 6% respectively.

*Other sales tripled to $27 million from $9 million in the prior year, primarily reflecting the conversion in July 2012 of five Tiffany stores in the United Arab Emirates from independently-operated to company-operated. 

In the first quarter, Tiffany opened one store, in Xi'an, China and closed one in Taichung, Taiwan. The Company currently operates approximately 275 stores (115 in the Americas, 66 in Asia-Pacific, 55 in Japan, 34 in Europe and five in the U.A.E.), compared with 251 stores (105 in the Americas, 59 in Asia-Pacific, 55 in Japan and 32 in Europe) a year ago. 

Tiffany said it plans to add a net of 14 company-operated stores (opening six in the Americas, seven in Asia-Pacific and three in Europe, and closing one each in Japan and Taiwan), as well as refurbishing a number of existing locations around the world. 

Gross margin (gross profit as a percentage of net sales) was 56.2% versus last year's 57.3%. The company said this was expected as it reflects a shift in sales mix toward higher-priced, lower gross margin products. 

Selling, general and administrative expenses (SG&A) increased 8% in the quarter due to  $9 million of expenses tied to cost reduction initiatives related to staffing reductions, as well as subleasing of office space at a loss, the company said. Excluding those costs, SG&A expenses would have increased 6% due to new store-related costs and higher marketing spending for the Blue Book event. 

Net inventories were $2.3 billion at April 30, 2013, or 4% higher than a year ago, the company said. A 12% increase in finished goods inventories to support new store openings and expanded product assortments was partly offset by a 5% decline in combined raw material and work-in-process inventories. On a constant-exchange-rate basis, net inventories were 7% higher than a year ago.

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LVMH Watch and Jewelry Revenue Down 1%

LVMH Moët Hennessy Louis Vuitton, said Monday that first quarter revenue for its Watches and Jewelry division fell 1 percent to 624 million euros ($815.6 million) due to cautious buying by multi-brand retailers. It was the only business division in the luxury goods conglomerate to show a decline in revenue for the period. In organic terms (with comparable structure and constant exchange rates), revenue grew 2 percent.

TAG Heuer’s first quarter was marked by the 50th anniversary of its Carrera line and the new partnership with McLaren which was announced at the Geneva Motor Show. Hublot and Zenith also had a good start to the year. In jewelry, Bulgari “recorded strong revenue growth in its own stores,” largely based on the success of its Serpenti line.

Other brands in the division are Hublot, Zenith, Chaumet, Fred and De Beers Diamond Jewellers.

LVMH said total revenue for the 2013 fiscal year increased 6 percent to 6.94 billion euros ($9.07 billion). Organic revenue growth was 7 percent compared to the same period in 2012, which saw a sharp rise.

The Paris-based conglomerate—whose brands also include Moët Chandon, Louis Vuitton, Dior and Sephora—said it saw “strong growth” in Asia and the United States, while Europe “demonstrates good resistance despite a challenging economic environment.”

First quarter results in its other business division are as follows:

The Wines & Spirits division recorded a revenue rise of 6 percent. Champagne sales were “notably robust” in Asia, which compensated for softer demand in Europe. Hennessy cognac had a “solid performance” in the United States and “rapid growth” in China.

The Fashion & Leather Goods division was nearly flat year-over (0.4%) Louis Vuitton “continued its progress,” the company said. Fendi “benefited from continued developments in fur and leather and pursues” and Céline “made excellent progress” in its own stores.

Perfumes & Cosmetics division experienced a 5 percent increase for the period. Christian Dior recorded “solid growth” due to the “vitality of its perfumes and, in particular, the continued strength of J’adore, Miss Dior and Dior Homme. The new lipstick Dior Addict and the premium skincare Prestige also contributed to the brand’s growth. Guerlain continued to benefit from the strong momentum of La Petite Robe Noire and the success of its high-end skincare Orchidée Impériale,” the company said.

In the Selective Retailing division showed a 16 percent increase for the period. DFS had an “excellent performance driven by the continued growth in Asian tourism.” Sephora gained market share in all its regions as it continues to expand its global store network. Online sales also experienced “rapid growth.”

“In an economic environment which remains uncertain in Europe, LVMH will continue to focus its efforts on developing its brands, will maintain a strict control over costs and will target its investments on the quality, the excellence and the innovation of its products and their distribution,” the company said. 


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LVMH Moët Hennessy Louis Vuitton, said Monday that first quarter revenue for its Watches and Jewelry division fell 1 percent to 624 million euros ($815.6 million) due to cautious buying by multi-brand retailers. It was the only business division in the luxury goods conglomerate to show a decline in revenue for the period. In organic terms (with comparable structure and constant exchange rates), revenue grew 2 percent.

TAG Heuer’s first quarter was marked by the 50th anniversary of its Carrera line and the new partnership with McLaren which was announced at the Geneva Motor Show. Hublot and Zenith also had a good start to the year. In jewelry, Bulgari “recorded strong revenue growth in its own stores,” largely based on the success of its Serpenti line.

Other brands in the division are Hublot, Zenith, Chaumet, Fred and De Beers Diamond Jewellers.

LVMH said total revenue for the 2013 fiscal year increased 6 percent to 6.94 billion euros ($9.07 billion). Organic revenue growth was 7 percent compared to the same period in 2012, which saw a sharp rise.

The Paris-based conglomerate—whose brands also include Moët Chandon, Louis Vuitton, Dior and Sephora—said it saw “strong growth” in Asia and the United States, while Europe “demonstrates good resistance despite a challenging economic environment.”

First quarter results in its other business division are as follows:

The Wines & Spirits division recorded a revenue rise of 6 percent. Champagne sales were “notably robust” in Asia, which compensated for softer demand in Europe. Hennessy cognac had a “solid performance” in the United States and “rapid growth” in China.

The Fashion & Leather Goods division was nearly flat year-over (0.4%) Louis Vuitton “continued its progress,” the company said. Fendi “benefited from continued developments in fur and leather and pursues” and Céline “made excellent progress” in its own stores.

Perfumes & Cosmetics division experienced a 5 percent increase for the period. Christian Dior recorded “solid growth” due to the “vitality of its perfumes and, in particular, the continued strength of J’adore, Miss Dior and Dior Homme. The new lipstick Dior Addict and the premium skincare Prestige also contributed to the brand’s growth. Guerlain continued to benefit from the strong momentum of La Petite Robe Noire and the success of its high-end skincare Orchidée Impériale,” the company said.

In the Selective Retailing division showed a 16 percent increase for the period. DFS had an “excellent performance driven by the continued growth in Asian tourism.” Sephora gained market share in all its regions as it continues to expand its global store network. Online sales also experienced “rapid growth.”

“In an economic environment which remains uncertain in Europe, LVMH will continue to focus its efforts on developing its brands, will maintain a strict control over costs and will target its investments on the quality, the excellence and the innovation of its products and their distribution,” the company said. 


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The Former Harry Winston Diamond Corp. Files First Earnings Report Under New Name; Ekati Mine Acquisition Is Approved; Frédéric de Narp Reportedly Resigns

The new Dominion Diamond Corp. logo.

Dominion Diamond Corp., the company formerly known as Harry Winston Diamond Corp., said that consolidated sales from continuing operations increased 8 percent to $110.1 million for the fourth quarter. The increase was the result of an improved sales mix, partially offset by a 3 percent decrease in volume of carats sold during the quarter. It also cited increased demand in India, China and the United States.

Meanwhile, operating profit from continuing operations fell 12 percent in the quarter ended Jan 31 to $21 million. Consolidated EBITDA from continuing operations decreased 6 percent to $45.3 million.

Net income from continuing operations fell to $12.1 million, or 14 cents per share, from $12.7 million, or 15 cents per share, a year earlier.

Since 2006, the company operated as two segments: a luxury retail jewelry and watch division under the iconic Harry Winston brand name and a diamond mining business. The company closed its sale of the luxury brand segment to the Swatch Group Ltd. on March 26 in a deal valued at $1 billion. As part of the closing of the transaction, the company changed its name to Dominion Diamond Corp. and its common shares now trade on both the Toronto and New York stock exchanges under the symbol DDC.

The company now operates solely as diamond mining and marketing business and its earnings report reflects this with the results of the luxury brand segment treated as discontinued operations for accounting and reporting purposes.

Other fourth quarter highlights include:

* Rough diamond production during the fourth calendar quarter increased 19 percent to 1.9 million carats.

* The company had 500,000 carats of rough diamond inventory with an estimated current market value of approximately $65 million at January 31, of which approximately $25 million represents rough diamond inventory available for sale, with the remaining $40 million being sorted.

In related news:

* The company previously said it received regulatory approval to complete the $500 million acquisition of the Ekati diamond mine in Canada’s Northwest Territories and diamond sorting and sales facilities in Yellowknife, Canada, and Antwerp and Belgium, from mining company BHP Billiton Canada Inc. Dominion said it expects the transaction to close on or about April 10. It was speculated that the sale of the luxury retail segment was used to finance the acquisition.

* In addition, the company is reportedly interested in buying the remaining stake in Diavik diamond mine. It currently owns a 40 percent share of the mine with the remaining interest owned by mining company Rio Tinto, as Rio has stated a desire to pull out of the diamond business.

* Frédéric de Narp, president and CEO of the Harry Winston luxury segment, has resigned, according to a report in the New York Post. Nayla Hayek, a Swatch board member and daughter of the company’s founder Nicolas Hayek, has assumed de Narp’s role.

“The last year and this first quarter has been a time of great positive change for the company, including changing its very identity,” said Robert Gannicott, Dominion Diamond Corp.’s chairman and CEO. “This change reflects a focus on the production, sorting and sale of diamonds from Northern Canada, a region that we know and understand well. The acquisition of the Ekati Mine, and its operating team, is expected to close next week giving us operational control of both a producing mine and development opportunities in the large scale resources on the Ekati property. Together with our exploration acreage adjacent to the Ekati and Diavik properties, this positions us from grass-roots exploration through development opportunities. We also become the largest supplier of Canadian diamonds sold through an expert sorting and marketing chain that we have perfected through the years of Diavik production.” 

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The new Dominion Diamond Corp. logo.

Dominion Diamond Corp., the company formerly known as Harry Winston Diamond Corp., said that consolidated sales from continuing operations increased 8 percent to $110.1 million for the fourth quarter. The increase was the result of an improved sales mix, partially offset by a 3 percent decrease in volume of carats sold during the quarter. It also cited increased demand in India, China and the United States.

Meanwhile, operating profit from continuing operations fell 12 percent in the quarter ended Jan 31 to $21 million. Consolidated EBITDA from continuing operations decreased 6 percent to $45.3 million.

Net income from continuing operations fell to $12.1 million, or 14 cents per share, from $12.7 million, or 15 cents per share, a year earlier.

Since 2006, the company operated as two segments: a luxury retail jewelry and watch division under the iconic Harry Winston brand name and a diamond mining business. The company closed its sale of the luxury brand segment to the Swatch Group Ltd. on March 26 in a deal valued at $1 billion. As part of the closing of the transaction, the company changed its name to Dominion Diamond Corp. and its common shares now trade on both the Toronto and New York stock exchanges under the symbol DDC.

The company now operates solely as diamond mining and marketing business and its earnings report reflects this with the results of the luxury brand segment treated as discontinued operations for accounting and reporting purposes.

Other fourth quarter highlights include:

* Rough diamond production during the fourth calendar quarter increased 19 percent to 1.9 million carats.

* The company had 500,000 carats of rough diamond inventory with an estimated current market value of approximately $65 million at January 31, of which approximately $25 million represents rough diamond inventory available for sale, with the remaining $40 million being sorted.

In related news:

* The company previously said it received regulatory approval to complete the $500 million acquisition of the Ekati diamond mine in Canada’s Northwest Territories and diamond sorting and sales facilities in Yellowknife, Canada, and Antwerp and Belgium, from mining company BHP Billiton Canada Inc. Dominion said it expects the transaction to close on or about April 10. It was speculated that the sale of the luxury retail segment was used to finance the acquisition.

* In addition, the company is reportedly interested in buying the remaining stake in Diavik diamond mine. It currently owns a 40 percent share of the mine with the remaining interest owned by mining company Rio Tinto, as Rio has stated a desire to pull out of the diamond business.

* Frédéric de Narp, president and CEO of the Harry Winston luxury segment, has resigned, according to a report in the New York Post. Nayla Hayek, a Swatch board member and daughter of the company’s founder Nicolas Hayek, has assumed de Narp’s role.

“The last year and this first quarter has been a time of great positive change for the company, including changing its very identity,” said Robert Gannicott, Dominion Diamond Corp.’s chairman and CEO. “This change reflects a focus on the production, sorting and sale of diamonds from Northern Canada, a region that we know and understand well. The acquisition of the Ekati Mine, and its operating team, is expected to close next week giving us operational control of both a producing mine and development opportunities in the large scale resources on the Ekati property. Together with our exploration acreage adjacent to the Ekati and Diavik properties, this positions us from grass-roots exploration through development opportunities. We also become the largest supplier of Canadian diamonds sold through an expert sorting and marketing chain that we have perfected through the years of Diavik production.” 

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Another Strong Year for Signet Jewelers

Signet Jewelers, the largest specialty retail jeweler in the U.S. and U.K., continues to benefit from strong retail sales in U.S., which more than offset weaker figures in the U.K.

The Bermuda-based company said Thursday that fourth quarter sales increased 11.8 percent, year-over-year, to $1.51 billion. Same store sales for the period ended Feb. 2, increased 3.5 percent compared to an increase of 6.9 percent in the prior fiscal year. E-commerce sales increased 46.9 percent to $63.9 million.

In its U.S. division sales for the fourth quarter increased 14.2 percent to $1.24 billion. Same store sales increased 4.9 percent compared to an increase of 8.3% in the fourth quarter Fiscal 2012. Sales increases were driven by broad based strength across most merchandise categories in both Kay and Jared retail chains and its acquisition of the Ultra Diamonds retail chain, the fifth largest in the U.S.

In its U.K. division total sales were up 1.8 percent to $268.4 million (fourth quarter Fiscal 2012: $263.7 million). Same store sales fell 1.9 percent compared to an increase of 1.7 percent in the fourth quarter Fiscal 2012. Sales performance was primarily attributed to lower store traffic and increased customer purchases of promotional merchandise, which impacted sales and gross margin.

In Fiscal 2013, Signet's total sales increased 6.2 percent to $3.98 billion. Same store sales were up 3.3 percent compared to an increase of 9 percent in Fiscal 2012. E-commerce sales increased 40.6 percent to $129.8 million.

In the US division total sales for the 2013 fiscal year increased 7.9 percent to $3.27 billion. Same store sales increased 4 percent for the year compared to an increase of 11.1 percent in Fiscal 2012. Sales increases were driven by broad based strength across most merchandise categories in both Kay and Jared, as well as the Ultra acquisition.

The number of merchandise transactions increased in Kay and Jared, the company said. Average merchandise transaction values were up in Kay stores due to changes in sales mix and down in Jared stores due primarily to the discontinuation of Rolex watches. E-commerce sales were $101.4 million compared to $68.5 million in Fiscal 2012, up $32.9 million or 48 percent.

In the U.K. division total sales fell 0.8 percent to $709.5 million. Same store sales increased 0.3 percent compared to an increase of 0.9 percent in Fiscal 2012. Sales performance was primarily attributed to lower traffic particularly in the fourth quarter.

In its guidance the company, which trade on the NYSE, said expectations are for same store sales in the first quarter to be up 5 to 7 percent.

“Signet had an excellent Fiscal 2013 with a 3.3% increase in same store sales and a 16.6 percent increase in earnings per share,” said Mike Barnes, Signet CEO. “The acquisition of Ultra, our share repurchase program and the increase in our quarterly dividend demonstrate our ability to capitalize on our excellent balance sheet to provide for our long-term growth and increase value for our shareholders.”

He added, “We are pleased with our progress quarter-to-date and expect to achieve our goals for the first quarter…. We will continue to advance our expansion goals as we integrate our recently acquired Ultra stores, execute on our multi-channel growth initiatives and expand our store base.”

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Signet Jewelers, the largest specialty retail jeweler in the U.S. and U.K., continues to benefit from strong retail sales in U.S., which more than offset weaker figures in the U.K.

The Bermuda-based company said Thursday that fourth quarter sales increased 11.8 percent, year-over-year, to $1.51 billion. Same store sales for the period ended Feb. 2, increased 3.5 percent compared to an increase of 6.9 percent in the prior fiscal year. E-commerce sales increased 46.9 percent to $63.9 million.

In its U.S. division sales for the fourth quarter increased 14.2 percent to $1.24 billion. Same store sales increased 4.9 percent compared to an increase of 8.3% in the fourth quarter Fiscal 2012. Sales increases were driven by broad based strength across most merchandise categories in both Kay and Jared retail chains and its acquisition of the Ultra Diamonds retail chain, the fifth largest in the U.S.

In its U.K. division total sales were up 1.8 percent to $268.4 million (fourth quarter Fiscal 2012: $263.7 million). Same store sales fell 1.9 percent compared to an increase of 1.7 percent in the fourth quarter Fiscal 2012. Sales performance was primarily attributed to lower store traffic and increased customer purchases of promotional merchandise, which impacted sales and gross margin.

In Fiscal 2013, Signet's total sales increased 6.2 percent to $3.98 billion. Same store sales were up 3.3 percent compared to an increase of 9 percent in Fiscal 2012. E-commerce sales increased 40.6 percent to $129.8 million.

In the US division total sales for the 2013 fiscal year increased 7.9 percent to $3.27 billion. Same store sales increased 4 percent for the year compared to an increase of 11.1 percent in Fiscal 2012. Sales increases were driven by broad based strength across most merchandise categories in both Kay and Jared, as well as the Ultra acquisition.

The number of merchandise transactions increased in Kay and Jared, the company said. Average merchandise transaction values were up in Kay stores due to changes in sales mix and down in Jared stores due primarily to the discontinuation of Rolex watches. E-commerce sales were $101.4 million compared to $68.5 million in Fiscal 2012, up $32.9 million or 48 percent.

In the U.K. division total sales fell 0.8 percent to $709.5 million. Same store sales increased 0.3 percent compared to an increase of 0.9 percent in Fiscal 2012. Sales performance was primarily attributed to lower traffic particularly in the fourth quarter.

In its guidance the company, which trade on the NYSE, said expectations are for same store sales in the first quarter to be up 5 to 7 percent.

“Signet had an excellent Fiscal 2013 with a 3.3% increase in same store sales and a 16.6 percent increase in earnings per share,” said Mike Barnes, Signet CEO. “The acquisition of Ultra, our share repurchase program and the increase in our quarterly dividend demonstrate our ability to capitalize on our excellent balance sheet to provide for our long-term growth and increase value for our shareholders.”

He added, “We are pleased with our progress quarter-to-date and expect to achieve our goals for the first quarter…. We will continue to advance our expansion goals as we integrate our recently acquired Ultra stores, execute on our multi-channel growth initiatives and expand our store base.”

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Tiffany’s Q4 and Full-Year Sales Up 4%

Tiffany & Co. said Friday net sales in the fourth quarter increased 4 percent to $1.2 billion year-over-year and net earnings rose 1 percent to $180 million. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales rose 5 percent, for the period ended Jan. 31, due to growth in all regions and comparable store sales equaled the prior year.

For the year, also ended January 31, worldwide net sales increased 4 percent to $3.8 billion, year-over-year, while net earnings declined 5 percent to $416 million. Earnings fell 11 percent when excluding nonrecurring items in the prior year.

“These quarterly sales results were consistent with the holiday trends we had issued in early January,” said Michael J. Kowalski, Tiffany chairman and CEO. “While financial results in fiscal 2012 were disappointing due to lower-than-expected sales growth and pressures on gross margin, we continued to maintain a longer-term focus on strengthening global awareness of the Tiffany & Co. brand and on further developing compelling product offerings.”

Kowalski took an optimistic tone for Tiffany’s 2013 outlook. “We will be pursuing important growth opportunities in 2013, with plans including exciting new jewelry collections, enhanced customer communications through print and digital media, and expansion of our global base with additional stores,” he said. “Tiffany is well positioned to achieve net earnings growth of 6 percent – 9 percent and healthy free cash flow.”

Net sales highlights are as follows:

* Total sales in the Americas region increased 2 percent to $620 million in the fourth quarter and 2 percent to $1.8 billion in the full year (representing 48 percent of 2012 worldwide sales). On a constant-exchange-rate basis, total sales increased 2 percent in both the quarter and full year; on that basis, comparable store sales declined 2 percent in both the quarter and full year. Sales in the New York flagship store fell 3 percent in both the quarter and full year, while comparable branch store sales were 2 percent below both prior-year periods with no meaningful geographical differences in the U.S.). Internet and catalog sales rose 6 percent and 4 percent in the fourth quarter and full year.

* In the Asia-Pacific region, total sales rose 13 percent to $254 million in the fourth quarter and 8% to $810 million, or 21% of worldwide sales, in the full year. On a constant-exchange-rate basis, total sales rose 10% in the fourth quarter due to sales growth in Greater China and in other markets and rose 8% in the full year; on that basis, comparable store sales rose 6% in the quarter and 2% in the full year.

* Total sales in Japan declined 6 percent to $192 million in the fourth quarter, reflecting a weaker Japanese yen versus the U.S. dollar. Sales for the full year increased 4 percent to $639 million, or 17 percent. However, on a constant-exchange-rate basis, total sales rose 2 percent in the quarter and 6 percent. Comparable store sales rose 2 percent and 7 percent in the quarter and full year.

* In Europe, total sales increased 3 percent to $146 million in the fourth quarter due to mixed performances by country and also rose 3% to $432 million, or 11% of worldwide sales, in the full year. On a constant-exchange-rate basis, total sales increased 3% and 7% in the quarter and full year and comparable store sales were unchanged in the quarter and rose 2% in the full year.

* Sales categorized “Other,” nearly doubled to $24 million in the fourth quarter and rose 41 percent to $73 million in the full year. The strong growth in both periods reflected the conversion in July of five Tiffany & Co. stores in the United Arab Emirates from independently-operated distribution to company-operated retail stores.

* Tiffany added 28 company-operated stores in the full year: 13 in the Americas with four in the U.S., six in Canada (including four department-store boutiques in Canada that were converted to company-operated locations), two in Mexico and one in Brazil; eight in Asia-Pacific including six in China, one in Australia and one in Singapore; two in Europe including one in France and one in the Czech Republic; and the five stores in the U.A.E. The company currently operates 275 stores (115 in the Americas, 66 in Asia-Pacific, 55 in Japan, 34 in Europe and five in the U.A.E.), compared with 247 stores a year ago.

Tiffany’s other financial highlights:

* Gross margins (gross profit as a percentage of net sales) of 59.1 percent in the fourth quarter and 57 percent for the full year were below margins of 60.4 percent and 59 percent in the respective prior-year periods. The declines largely reflected pressures from precious metal and diamond costs; a shift in sales mix toward higher-priced, lower margin products; and reduced sales leverage on fixed costs.

* SG&A (selling, general and administrative) expenses increased 2 percent in the fourth quarter. In the full year, SG&A expenses increased 2 percent; however, if nonrecurring costs related to the 2011 relocation of Tiffany's New York headquarters staff were excluded, SG&A expense would have increased 5 percent (see "Non-GAAP Measures" schedule) in the full year due to store occupancy costs related to new and existing stores, increased marketing spending and higher labor costs.

* Other expenses, net were $14 million and $54 million in the fourth quarter and full year, compared with $13 million and $43 million in the respective prior-year periods. Increased average borrowing levels have resulted in higher interest expense in both periods.

* Net inventories of $2.2 billion at January 31 were 8 percent higher than the prior year-end, reflecting 13 percent growth in finished goods inventory and 2 percent growth in combined raw materials and work-in-process, all to support new store openings and expanded product assortments.

* Capital expenditures of $220 million in 2012 were modestly lower than $239 million in the prior year; 2011 had included expenditures for the relocation of Tiffany's headquarters staff.

* In the full year, the company spent $54 million to repurchase approximately 813,000 shares of its Common Stock at an average cost of $66.54 per share, but did not repurchase shares in the fourth quarter. Approximately $164 million remains available for repurchases under the currently authorized program which expires in January 2014.

In its outlook, the company expects worldwide net sales to grow 6 percent to 8 percent in U.S dollars. On a constant-exchange-rate basis, an expected high-single-digit percentage increase in worldwide net sales includes sales growth in all regions, ranging from a mid-teens percentage increase in Asia-Pacific to a low-single-digit increase in Japan.

The company said it plans to open 15 new company-operated stores including five in the Americas, seven in Asia-Pacific, three in Europe; while closing one in Japan. It also plans  and to refurbish a number of existing locations around the world.

It expects net earnings from operations increasing 6 percent to 9 percent to a range of $3.43-$3.53 per diluted share. Net earnings from operations are expected to decline approximately 15 percent- 20 percent in the first quarter due to gross margin pressure and higher marketing-related costs, to be followed by earnings growth in all subsequent quarters. In addition, this forecast excludes $0.05 per diluted share of expected first quarter charges for staffing and occupancy adjustments.


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Tiffany & Co. said Friday net sales in the fourth quarter increased 4 percent to $1.2 billion year-over-year and net earnings rose 1 percent to $180 million. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales rose 5 percent, for the period ended Jan. 31, due to growth in all regions and comparable store sales equaled the prior year.

For the year, also ended January 31, worldwide net sales increased 4 percent to $3.8 billion, year-over-year, while net earnings declined 5 percent to $416 million. Earnings fell 11 percent when excluding nonrecurring items in the prior year.

“These quarterly sales results were consistent with the holiday trends we had issued in early January,” said Michael J. Kowalski, Tiffany chairman and CEO. “While financial results in fiscal 2012 were disappointing due to lower-than-expected sales growth and pressures on gross margin, we continued to maintain a longer-term focus on strengthening global awareness of the Tiffany & Co. brand and on further developing compelling product offerings.”

Kowalski took an optimistic tone for Tiffany’s 2013 outlook. “We will be pursuing important growth opportunities in 2013, with plans including exciting new jewelry collections, enhanced customer communications through print and digital media, and expansion of our global base with additional stores,” he said. “Tiffany is well positioned to achieve net earnings growth of 6 percent – 9 percent and healthy free cash flow.”

Net sales highlights are as follows:

* Total sales in the Americas region increased 2 percent to $620 million in the fourth quarter and 2 percent to $1.8 billion in the full year (representing 48 percent of 2012 worldwide sales). On a constant-exchange-rate basis, total sales increased 2 percent in both the quarter and full year; on that basis, comparable store sales declined 2 percent in both the quarter and full year. Sales in the New York flagship store fell 3 percent in both the quarter and full year, while comparable branch store sales were 2 percent below both prior-year periods with no meaningful geographical differences in the U.S.). Internet and catalog sales rose 6 percent and 4 percent in the fourth quarter and full year.

* In the Asia-Pacific region, total sales rose 13 percent to $254 million in the fourth quarter and 8% to $810 million, or 21% of worldwide sales, in the full year. On a constant-exchange-rate basis, total sales rose 10% in the fourth quarter due to sales growth in Greater China and in other markets and rose 8% in the full year; on that basis, comparable store sales rose 6% in the quarter and 2% in the full year.

* Total sales in Japan declined 6 percent to $192 million in the fourth quarter, reflecting a weaker Japanese yen versus the U.S. dollar. Sales for the full year increased 4 percent to $639 million, or 17 percent. However, on a constant-exchange-rate basis, total sales rose 2 percent in the quarter and 6 percent. Comparable store sales rose 2 percent and 7 percent in the quarter and full year.

* In Europe, total sales increased 3 percent to $146 million in the fourth quarter due to mixed performances by country and also rose 3% to $432 million, or 11% of worldwide sales, in the full year. On a constant-exchange-rate basis, total sales increased 3% and 7% in the quarter and full year and comparable store sales were unchanged in the quarter and rose 2% in the full year.

* Sales categorized “Other,” nearly doubled to $24 million in the fourth quarter and rose 41 percent to $73 million in the full year. The strong growth in both periods reflected the conversion in July of five Tiffany & Co. stores in the United Arab Emirates from independently-operated distribution to company-operated retail stores.

* Tiffany added 28 company-operated stores in the full year: 13 in the Americas with four in the U.S., six in Canada (including four department-store boutiques in Canada that were converted to company-operated locations), two in Mexico and one in Brazil; eight in Asia-Pacific including six in China, one in Australia and one in Singapore; two in Europe including one in France and one in the Czech Republic; and the five stores in the U.A.E. The company currently operates 275 stores (115 in the Americas, 66 in Asia-Pacific, 55 in Japan, 34 in Europe and five in the U.A.E.), compared with 247 stores a year ago.

Tiffany’s other financial highlights:

* Gross margins (gross profit as a percentage of net sales) of 59.1 percent in the fourth quarter and 57 percent for the full year were below margins of 60.4 percent and 59 percent in the respective prior-year periods. The declines largely reflected pressures from precious metal and diamond costs; a shift in sales mix toward higher-priced, lower margin products; and reduced sales leverage on fixed costs.

* SG&A (selling, general and administrative) expenses increased 2 percent in the fourth quarter. In the full year, SG&A expenses increased 2 percent; however, if nonrecurring costs related to the 2011 relocation of Tiffany's New York headquarters staff were excluded, SG&A expense would have increased 5 percent (see "Non-GAAP Measures" schedule) in the full year due to store occupancy costs related to new and existing stores, increased marketing spending and higher labor costs.

* Other expenses, net were $14 million and $54 million in the fourth quarter and full year, compared with $13 million and $43 million in the respective prior-year periods. Increased average borrowing levels have resulted in higher interest expense in both periods.

* Net inventories of $2.2 billion at January 31 were 8 percent higher than the prior year-end, reflecting 13 percent growth in finished goods inventory and 2 percent growth in combined raw materials and work-in-process, all to support new store openings and expanded product assortments.

* Capital expenditures of $220 million in 2012 were modestly lower than $239 million in the prior year; 2011 had included expenditures for the relocation of Tiffany's headquarters staff.

* In the full year, the company spent $54 million to repurchase approximately 813,000 shares of its Common Stock at an average cost of $66.54 per share, but did not repurchase shares in the fourth quarter. Approximately $164 million remains available for repurchases under the currently authorized program which expires in January 2014.

In its outlook, the company expects worldwide net sales to grow 6 percent to 8 percent in U.S dollars. On a constant-exchange-rate basis, an expected high-single-digit percentage increase in worldwide net sales includes sales growth in all regions, ranging from a mid-teens percentage increase in Asia-Pacific to a low-single-digit increase in Japan.

The company said it plans to open 15 new company-operated stores including five in the Americas, seven in Asia-Pacific, three in Europe; while closing one in Japan. It also plans  and to refurbish a number of existing locations around the world.

It expects net earnings from operations increasing 6 percent to 9 percent to a range of $3.43-$3.53 per diluted share. Net earnings from operations are expected to decline approximately 15 percent- 20 percent in the first quarter due to gross margin pressure and higher marketing-related costs, to be followed by earnings growth in all subsequent quarters. In addition, this forecast excludes $0.05 per diluted share of expected first quarter charges for staffing and occupancy adjustments.


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Luxury Brands Lift PPR’s Sales and Profit for 2012

PPR, the Parisian holdings company, said net profit in 2012 increased by 28.2 percent to €1.27 billion ($1.7 billion). Revenue increased 20.8 percent to €9.73 billion ($13 billion).

The company, which has divided its high-end businesses into the categories of luxury and sport and lifestyle, said its luxury goods division reported a 27.6 percent increase in operating profit to €1.61 billion ($2.14 billion). This more than offset a 12.1 percent decline in operating profit in its sports and lifestyle division.

The company’s brands include Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga, Brioni, Christopher Kane, Stella McCartney, Sergio Rossi, Boucheron, Girard-Perregaux, JeanRichard, Qeelin and Puma. 

Read PPR Shopping for Jewelry and Watch Brands

“PPR's results for 2012 are excellent, thanks to the exceptional performances of all brands in our luxury division,” said François-Henri Pinault, PPR chairman and CEO. “Our strong performance also highlights the good geographic balance of our activities and the consistency of the Group's strategy.”

The company, which operates in more than 120 countries, said revenue generated outside the Eurozone rose 11.6 percent in 2012 based on comparable data and accounted for 78.6 percent of sales for the year, versus 77.9 percent in 2011. Sales contribution from France remained unchanged from 2011, representing 5.5 percent of total revenue on a comparable basis.

In 2012, PPR said it continued its expansion in rapid-growth markets where revenue advanced 13.7 percent on a comparable basis and accounted for 37.6 percent of sales, representing a 100 basis-point increase on 2011 on a comparable basis. Sales in the Asia-Pacific region (excluding Japan) accounted for 25 percent of the total sales of the Group's brands versus 24.5 percent in 2011 on a comparable basis.

The company also is in the process of strengthening its position in the luxury and sports and lifestyle categories while divesting its holdings in other areas. For example, in December 2012, it acquired of a majority stake in Chinese luxury jewelry brand, Qeelin, and last month announced it acquired a majority stake in the luxury designer brand, Christopher Kane. It is also announced in January that it has found a buyer for Redcats children and family divisions.

The company added that it’s in the process of speeding up and expanding the scope of its transformation of Puma “in order to increase efficiencies in terms of organization, processes and systems and to streamline its cost structure, notably in Europe.” In October, Jean-François Palus was appointed chairman of the Administrative Board of Puma SE, replacing Jochen Zeitz.


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PPR, the Parisian holdings company, said net profit in 2012 increased by 28.2 percent to €1.27 billion ($1.7 billion). Revenue increased 20.8 percent to €9.73 billion ($13 billion).

The company, which has divided its high-end businesses into the categories of luxury and sport and lifestyle, said its luxury goods division reported a 27.6 percent increase in operating profit to €1.61 billion ($2.14 billion). This more than offset a 12.1 percent decline in operating profit in its sports and lifestyle division.

The company’s brands include Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga, Brioni, Christopher Kane, Stella McCartney, Sergio Rossi, Boucheron, Girard-Perregaux, JeanRichard, Qeelin and Puma. 

Read PPR Shopping for Jewelry and Watch Brands

“PPR's results for 2012 are excellent, thanks to the exceptional performances of all brands in our luxury division,” said François-Henri Pinault, PPR chairman and CEO. “Our strong performance also highlights the good geographic balance of our activities and the consistency of the Group's strategy.”

The company, which operates in more than 120 countries, said revenue generated outside the Eurozone rose 11.6 percent in 2012 based on comparable data and accounted for 78.6 percent of sales for the year, versus 77.9 percent in 2011. Sales contribution from France remained unchanged from 2011, representing 5.5 percent of total revenue on a comparable basis.

In 2012, PPR said it continued its expansion in rapid-growth markets where revenue advanced 13.7 percent on a comparable basis and accounted for 37.6 percent of sales, representing a 100 basis-point increase on 2011 on a comparable basis. Sales in the Asia-Pacific region (excluding Japan) accounted for 25 percent of the total sales of the Group's brands versus 24.5 percent in 2011 on a comparable basis.

The company also is in the process of strengthening its position in the luxury and sports and lifestyle categories while divesting its holdings in other areas. For example, in December 2012, it acquired of a majority stake in Chinese luxury jewelry brand, Qeelin, and last month announced it acquired a majority stake in the luxury designer brand, Christopher Kane. It is also announced in January that it has found a buyer for Redcats children and family divisions.

The company added that it’s in the process of speeding up and expanding the scope of its transformation of Puma “in order to increase efficiencies in terms of organization, processes and systems and to streamline its cost structure, notably in Europe.” In October, Jean-François Palus was appointed chairman of the Administrative Board of Puma SE, replacing Jochen Zeitz.


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Blue Nile Q4 Net Sales Up 21%

Blue Nile said Tuesday that net sales increased 21.2 percent to $136.1 million for the fourth quarter, led by a 30 percent increase in bridal jewelry sales. Operating income for the period, ended December 30, 2012, totaled $7.1 million, representing an operating margin of 5.2 percent of net sales. Net income totaled $4.9 million, or $0.39 per diluted share. Non-GAAP adjusted EBITDA for the quarter totaled $9.1 million.

For the full year, the online diamond and fine jewelry retailer reported that net sales increased by 14.9 percent to $400 million. Operating income for the full year was $12.3 million, compared to $16.9 million in the prior year. Net income for the year was $8.4 million and earnings per diluted share totaled $0.63. Non-GAAP adjusted EBITDA for 2012 was $20.6 million.

Harvey Kanter, Blue Nile president and CEO of the Seattle-based company, noted that non-engagement jewelry sales for the holidays did not meet expectations but growth for the fourth quarter was still greater than 5 percent.

Net cash provided by operating activities totaled $34.4 million for the year compared to $15.4 million for the prior year. Non-GAAP free cash flow for the year was $31.9 million compared to $10.1 million for the prior year.

In its outlook, Blue Nile said it expects net sales to be between $94 million and $100 million with earnings per diluted share projected at $0.05 to $0.08. For the 2013 fiscal it expects net sales to be between $440 million and $470 million and earnings per diluted share are projected at $0.75 to $0.85.

"The fourth quarter caps off a great year of growth at Blue Nile, building upon our sequential growth while posting greater profitability versus the prior year. Investments we made in 2012 paid off with the highest annual levels of revenue growth and customer acquisition in five years, exceptional strength in engagement sales in the U.S., and a return to strong growth internationally,” said Harvey Kanter, Blue Nile president and CEO. “While we fell short of our expected sales of non-engagement jewelry during the holiday season, in part due to a weaker environment for consumer discretionary spending, we gained valuable insight that will guide the evolution of our product mix. We believe that our strategy to accelerate this part of our business is on track."

The company also announced it has entered into an agreement with U.S. Bank National Association for borrowing under a $35 million revolving credit facility maturing in 2014.

Among the highlights:

* U.S. engagement net sales for the fourth quarter 2012 increased 31 percent to $73.6 million. U.S. engagement net sales for the full year 2012 increased 21.7 percent to $226.6 million.

* U.S. non-engagement net sales for the fourth quarter 2012 increased 5.3 percent to $42.5 million. U.S. non-engagement net sales for the full year 2012 increased 4.9 percent to $111 million.
    
* International net sales for the fourth quarter 2012 increased 26.8 percent to $20 million. International net sales for the full year 2012 increased 11.7 percent to $62.4 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 12.6 percent for the fiscal year.
    
* Gross profit for the fourth quarter totaled $25.7 million. As a percent of net sales, gross profit was 18.8 percent compared to 20.7 percent for the fourth quarter of 2011. Gross profit for the year totaled $75.1 million.
    
    New customers, which are defined as individuals who have not made a prior purchase from Blue Nile, grew 7.8 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011. For the full year, new customers grew 17.6 percent compared to the full year of 2011.
    
* Selling, general and administrative expenses for the fourth quarter were $18.6 million, compared to $16.9 million in the fourth quarter of 2011. Selling, general and administrative expenses for the full year were $62.8 million, compared to $55.2 million for the full year 2011.
    
* Earnings per diluted share for the fourth quarter included stock-based compensation expense of $0.06 for the fourth quarter of 2012 and 2011.
    
* Cash and cash equivalents at the end of the fiscal year totaled $87 million, compared to $89.4 million at the end of the fiscal year 2011.

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Blue Nile said Tuesday that net sales increased 21.2 percent to $136.1 million for the fourth quarter, led by a 30 percent increase in bridal jewelry sales. Operating income for the period, ended December 30, 2012, totaled $7.1 million, representing an operating margin of 5.2 percent of net sales. Net income totaled $4.9 million, or $0.39 per diluted share. Non-GAAP adjusted EBITDA for the quarter totaled $9.1 million.

For the full year, the online diamond and fine jewelry retailer reported that net sales increased by 14.9 percent to $400 million. Operating income for the full year was $12.3 million, compared to $16.9 million in the prior year. Net income for the year was $8.4 million and earnings per diluted share totaled $0.63. Non-GAAP adjusted EBITDA for 2012 was $20.6 million.

Harvey Kanter, Blue Nile president and CEO of the Seattle-based company, noted that non-engagement jewelry sales for the holidays did not meet expectations but growth for the fourth quarter was still greater than 5 percent.

Net cash provided by operating activities totaled $34.4 million for the year compared to $15.4 million for the prior year. Non-GAAP free cash flow for the year was $31.9 million compared to $10.1 million for the prior year.

In its outlook, Blue Nile said it expects net sales to be between $94 million and $100 million with earnings per diluted share projected at $0.05 to $0.08. For the 2013 fiscal it expects net sales to be between $440 million and $470 million and earnings per diluted share are projected at $0.75 to $0.85.

"The fourth quarter caps off a great year of growth at Blue Nile, building upon our sequential growth while posting greater profitability versus the prior year. Investments we made in 2012 paid off with the highest annual levels of revenue growth and customer acquisition in five years, exceptional strength in engagement sales in the U.S., and a return to strong growth internationally,” said Harvey Kanter, Blue Nile president and CEO. “While we fell short of our expected sales of non-engagement jewelry during the holiday season, in part due to a weaker environment for consumer discretionary spending, we gained valuable insight that will guide the evolution of our product mix. We believe that our strategy to accelerate this part of our business is on track."

The company also announced it has entered into an agreement with U.S. Bank National Association for borrowing under a $35 million revolving credit facility maturing in 2014.

Among the highlights:

* U.S. engagement net sales for the fourth quarter 2012 increased 31 percent to $73.6 million. U.S. engagement net sales for the full year 2012 increased 21.7 percent to $226.6 million.

* U.S. non-engagement net sales for the fourth quarter 2012 increased 5.3 percent to $42.5 million. U.S. non-engagement net sales for the full year 2012 increased 4.9 percent to $111 million.
    
* International net sales for the fourth quarter 2012 increased 26.8 percent to $20 million. International net sales for the full year 2012 increased 11.7 percent to $62.4 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 12.6 percent for the fiscal year.
    
* Gross profit for the fourth quarter totaled $25.7 million. As a percent of net sales, gross profit was 18.8 percent compared to 20.7 percent for the fourth quarter of 2011. Gross profit for the year totaled $75.1 million.
    
    New customers, which are defined as individuals who have not made a prior purchase from Blue Nile, grew 7.8 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011. For the full year, new customers grew 17.6 percent compared to the full year of 2011.
    
* Selling, general and administrative expenses for the fourth quarter were $18.6 million, compared to $16.9 million in the fourth quarter of 2011. Selling, general and administrative expenses for the full year were $62.8 million, compared to $55.2 million for the full year 2011.
    
* Earnings per diluted share for the fourth quarter included stock-based compensation expense of $0.06 for the fourth quarter of 2012 and 2011.
    
* Cash and cash equivalents at the end of the fiscal year totaled $87 million, compared to $89.4 million at the end of the fiscal year 2011.

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Richemont Sales Up 21%, Profit Up 52%

Swiss luxury goods conglomerate, Compagnie Financière Richemont, said Friday that sales increased, year-over-year, for the first half of the fiscal year by 21 percent to €5.1 billion ($6.5 billion). By constant exchange rates sales grew 12 percent.

Profit for the period rose 52 percent to €1.08 billion ($1.37 billion); with operating profit up by 28 percent to €1.38 billion ($1.75 billion), benefiting from favorable currency movements, and gross profit up 24 percent to €3.31 billion ($4.2 billion). Operating margin gained 150 basis points to reach 27 percent.

The Geneva-based company cited “solid growth in all segments, regions and channels” along with favorable currency rates and Asian tourism in Europe for the strong performance.

Richemont owns many of the world’s best-known luxury brands (known as “maisons” by the company) including Cartier, Montblanc, Vacheron Constantin, Van Cleef & Arpels and Piaget. It also has wholesale businesses and owns the luxury retail website, Net-A-Porter.com. A list of its businesses can be found by following this link.

“The Group’s maisons benefited from favorable exchange rates effects, successful product launches as well as strong pricing power,” said Johann Rupert, Richemont executive chairman and CEO. “The increase in net profit was well above the prior period, reflecting both the growth in operating results and the non-recurrence of non-cash losses, which stemmed from the Swiss franc’s appreciation against the euro.”

He added, “Sales growth rates moderated, as evidenced by the October sales which grew by 12 percent at actual exchange rates. At constant exchange rates, they were 7 percent higher. Richemont is seeing good growth in Europe, supported by Asian tourism which is compensating for slower domestic Asia Pacific sales. Retail continued to lead wholesale, reflecting robust jewelry sales.”

Rupert did warn that sales and profits could slow as exchange rates will like be “less favorable” for the remainder of the fiscal year.

By region the company reported that sales in Europe accounted for 36 percent of overall sales as the region enjoyed good growth, with tourists driving the above-average increase. The highest growth rates were in the Maisons’ own boutiques in tourist destinations, including the Middle East. Europe’s reported a 23 percent growth in sales for the period to €1.85 billion ($2.35). At constant exchange rates, sales increased by 19 percent.

Asia Pacific remains the strongest region for Richemont but sales growth has slowed. The region accounted for 41 percent of the Group’s total, with Hong Kong and mainland China the two largest markets. “Sales growth in our maisons’ own boutiques in the region was well above the increase in sales to wholesale partners, partly reflecting the number of boutique openings in the last two years,” the company said. Asia reported a 22 percent growth in sales for the period to €2.1 billion ($2.67). At constant exchange rates, sales increased 9 percent.

After two years of what the company termed as “outstanding sales,” the Americas region reported that sales grew 16 percent to €698 million ($877 million). However, at constant exchange rates, growth was 4 percent. The region represented 14 percent of overall sales for Richemont.

Japan, which Richemont lists separately, saw what the company terms as “continued momentum” in sales in all retail segments. The struggling market saw its sales increase by 18 percent to €448 million ($570 million). At constant exchange rates the increase was 4 percent.

Its group of jewelry brands saw sales grow by 20 percent to €2.6 billion ($3.3 billion) with operating results of €958 ($1.21 billion), a 31 percent increase. Operating margin gained 280 basis points to reach 36.7 percent.

Meanwhile, its specialist watchmakers group reported that sales increased 25 percent to €1.46 billion ($1.85 billion) with operating results of €470 ($592 million), a 51 percent increase. Operating margin gained 560 basis points to reach 32.2 percent.

Montblanc, the German brand known for its luxury writing instruments but also manufactures and sells luxury leather goods, jewelry and watches, is listed separately by Richemont. It reported that its sales increased 10 percent to €368 million ($468 million) with operating results of €53 million ($67.3 million), a 2 percent decline. Operating margin lost 180 basis points to reach 14.4 percent. Richemont said that Montblanc doesn’t benefit much from sales in tourist destinations.

For its other businesses—which includes Richemont’s Fashion and Accessories businesses, Net-a-Porter and watch component manufacturing activities—results are as follows:

* Fashion & Accessories maisons saw double-digit sales growth and operating profits were in line with the prior period at €25 million.

* Sales growth at Net-a-Porter is “normalizing” but continues to exceed the Group’s average. Net-a-Porter reduced its losses during the period, but generated a positive operating cashflow.

* Losses at the Group’s watch component manufacturing facilities were in line with the comparative period.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

Swiss luxury goods conglomerate, Compagnie Financière Richemont, said Friday that sales increased, year-over-year, for the first half of the fiscal year by 21 percent to €5.1 billion ($6.5 billion). By constant exchange rates sales grew 12 percent.

Profit for the period rose 52 percent to €1.08 billion ($1.37 billion); with operating profit up by 28 percent to €1.38 billion ($1.75 billion), benefiting from favorable currency movements, and gross profit up 24 percent to €3.31 billion ($4.2 billion). Operating margin gained 150 basis points to reach 27 percent.

The Geneva-based company cited “solid growth in all segments, regions and channels” along with favorable currency rates and Asian tourism in Europe for the strong performance.

Richemont owns many of the world’s best-known luxury brands (known as “maisons” by the company) including Cartier, Montblanc, Vacheron Constantin, Van Cleef & Arpels and Piaget. It also has wholesale businesses and owns the luxury retail website, Net-A-Porter.com. A list of its businesses can be found by following this link.

“The Group’s maisons benefited from favorable exchange rates effects, successful product launches as well as strong pricing power,” said Johann Rupert, Richemont executive chairman and CEO. “The increase in net profit was well above the prior period, reflecting both the growth in operating results and the non-recurrence of non-cash losses, which stemmed from the Swiss franc’s appreciation against the euro.”

He added, “Sales growth rates moderated, as evidenced by the October sales which grew by 12 percent at actual exchange rates. At constant exchange rates, they were 7 percent higher. Richemont is seeing good growth in Europe, supported by Asian tourism which is compensating for slower domestic Asia Pacific sales. Retail continued to lead wholesale, reflecting robust jewelry sales.”

Rupert did warn that sales and profits could slow as exchange rates will like be “less favorable” for the remainder of the fiscal year.

By region the company reported that sales in Europe accounted for 36 percent of overall sales as the region enjoyed good growth, with tourists driving the above-average increase. The highest growth rates were in the Maisons’ own boutiques in tourist destinations, including the Middle East. Europe’s reported a 23 percent growth in sales for the period to €1.85 billion ($2.35). At constant exchange rates, sales increased by 19 percent.

Asia Pacific remains the strongest region for Richemont but sales growth has slowed. The region accounted for 41 percent of the Group’s total, with Hong Kong and mainland China the two largest markets. “Sales growth in our maisons’ own boutiques in the region was well above the increase in sales to wholesale partners, partly reflecting the number of boutique openings in the last two years,” the company said. Asia reported a 22 percent growth in sales for the period to €2.1 billion ($2.67). At constant exchange rates, sales increased 9 percent.

After two years of what the company termed as “outstanding sales,” the Americas region reported that sales grew 16 percent to €698 million ($877 million). However, at constant exchange rates, growth was 4 percent. The region represented 14 percent of overall sales for Richemont.

Japan, which Richemont lists separately, saw what the company terms as “continued momentum” in sales in all retail segments. The struggling market saw its sales increase by 18 percent to €448 million ($570 million). At constant exchange rates the increase was 4 percent.

Its group of jewelry brands saw sales grow by 20 percent to €2.6 billion ($3.3 billion) with operating results of €958 ($1.21 billion), a 31 percent increase. Operating margin gained 280 basis points to reach 36.7 percent.

Meanwhile, its specialist watchmakers group reported that sales increased 25 percent to €1.46 billion ($1.85 billion) with operating results of €470 ($592 million), a 51 percent increase. Operating margin gained 560 basis points to reach 32.2 percent.

Montblanc, the German brand known for its luxury writing instruments but also manufactures and sells luxury leather goods, jewelry and watches, is listed separately by Richemont. It reported that its sales increased 10 percent to €368 million ($468 million) with operating results of €53 million ($67.3 million), a 2 percent decline. Operating margin lost 180 basis points to reach 14.4 percent. Richemont said that Montblanc doesn’t benefit much from sales in tourist destinations.

For its other businesses—which includes Richemont’s Fashion and Accessories businesses, Net-a-Porter and watch component manufacturing activities—results are as follows:

* Fashion & Accessories maisons saw double-digit sales growth and operating profits were in line with the prior period at €25 million.

* Sales growth at Net-a-Porter is “normalizing” but continues to exceed the Group’s average. Net-a-Porter reduced its losses during the period, but generated a positive operating cashflow.

* Losses at the Group’s watch component manufacturing facilities were in line with the comparative period.

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