Tiffany & Co. 3Q Earnings Call Nuggets: Regional Sales, New Sales and Digital Business
Third quarter regional sales
In the Americas, total sales rose at a better than expected 17 percent due to an increase in the average price per units sold. We continue to see unit sales growth in all price strata above $250 with notable increases at the highest price points.
One example of the high end stronger activity was our successful annual Blue Book event for top customers held in October.
On a constant exchange rate basis, comparable store sales in the Americas rose 15 percent on top of a 5 percent increase from last year. Broadly speaking, our U.S. stores performed well along with Latin America and Canada stores.
New York flagship store sales increased 24 percent as compared to last year’s 3 percent decline, coming from a large increase due to sales to foreign tourists. Conversely, sales growth in New York area brand stores was more modest, reflecting a higher percentage of local customer demand.
In addition, a sizable portion of our total U.S. sales increase in the quarter came from sales to foreign visitors, particularly customers from Asia and to a lesser extent from Europe, but there was also a good increase in sales to U.S. customers.
New stores and digital sales
We opened three stores in the Americas in the third quarter including one in Richmond, Virginia, a fourth Las Vegas store and a third location in Brazil at the Iguatemi Department Store in Brasilia.
In addition, we opened a second Tiffany’s store in Milan in the Excelsior, which now gives us five stores in Italy. We also recently announced that Tiffany will open a store in Prague in 2012 in addition to other planned openings.
Combined Internet and catalog sales in the Americas increased 11 percent as compared to last year’s 7 percent rise, due to an increase in average sales per order and a smaller increase in the number of orders shipped.
On a related note, L2, a think tank for digital innovation, recently ranked Tiffany highest in their Digital IQ Index in the jewelry and watch category. They cited digital confidence as a point of differentiation for our brand because we offer a website that is searchable, sharable and mobile optimized, that ties social media efforts to a broader digital strategy.
We plan to further enhance our social media programs and dramatically revamp our website next year to derive strong marketing and sales benefits.
European Sales and Asian Website traffic
We saw a noticeable difference in performance between Continental Europe highlighted by double-digit comps in France, Germany and Italy versus a modest decline in U.K. comp sales. While Europe is facing challenging economic conditions, we’ve attributed Tiffany’s better performance in some countries to our growing brand awareness and market penetration.
However, we are not implying that Tiffany will be completely insulated from these economic challenges. Although a clear majority of our sales in Europe are the local customers, European sales have been increasingly benefiting in few countries from growing sales to foreign tourists notably from China and Russia.
We are also pleased with the performance of our website in Europe, Asia-Pacific and Japan. They are generating e-commerce sales and along with additional informational sites that we have in some Asia-Pacific countries, are also proving to be very effective marketing tools to drive customers to our stores.