Tiffany’s performance in China buoys Q2

NEW YORK — Tiffany & Co. saw sales growth and an improved operating margin for the second quarter ended July 31, fueled largely by its performance in China. 

The company’s total sales in the Americas region were lackluster, increasing 2% to $444 million in the second quarter. Comparable-store sales remained flat for the quarter.

Meanwhile, the company reported total sales of $208 million for the quarter in the Asia-Pacific region — a surge of 20% compared to the year-ago quarter. On a constant-exchange-rate basis, total sales also rose 20% and comparable store sales increased 13%, led by especially strong sales growth in Greater China.

In Japan, the negative translation effect from a substantially weaker yen caused total sales to decline 14% to $136 million for the quarter. However, on a constant-exchange-rate basis, total sales increased 7% in the second quarter due to comparable store sales growth of 8% with strong growth in engagement and higher-end jewelry categories.

“Total sales growth met our objective due to solid performance in most regions, and with particular strength in our statement and fine jewelry product categories,” said Michael J. Kowalski, chairman and CEO. “We were pleased with the results of our efforts to improve gross margin which, combined with well-controlled expenses, yielded a solid increase in operating margin.”

Total sales in Europe rose 11% to $111 million for the quarter. On a constant-exchange-rate basis, total sales rose 10% and comparable store sales rose 7%, due to sales growth in the United Kingdom and most of continental Europe.

Other sales increased 33% to $26 million for the quarter, primarily reflecting the conversion in July 2012 of five Tiffany & Co. stores in the United Arab Emirates from independently operated to company-operated.

As a result of better-than-expected earnings in the quarter, management increased its full year forecast to a range of $3.50-$3.60 per diluted share, compared with $3.43-$3.53 per diluted share in its previous outlook and $3.25 per diluted share in 2012.

Tiffany opened a store in Hong Kong, one in Verona, Italy and one in Villahermosa, Mexico, and closed one in Tokyo, Japan. The company operates 277 stores (116 in the Americas, 67 in Asia-Pacific, 54 in Japan, 35 in Europe and 5 in the U.A.E.).