Here’s What’s Driving Tiffany’s Top Line

Fiscal Q2 sales exceed expectation

Tiffany (TIF) has impressed with its sales performance so far this year. During the fiscal second quarter, it reported net sales of $1.1 billion, which was more than analysts’ expectation, and marked a 12.1% growth YoY (year-over-year). Higher unit volumes led by increased spending by local customers drove its top line. Its omnichannel offerings, new products, in-store initiatives, and effective marketing bode well for future growth.

The company’s management remained upbeat and expects fiscal 2018 net sales to mark high-single-digit growth despite the headwinds from adverse currency rates, which are likely to hurt tourist spending.

Here’s What’s Driving Tiffany’s Top Line

During the fiscal second quarter, Tiffany’s comps improved 8%, reflecting healthy sales growth across all business segments. In comparison, analysts expect Signet Jewelers’ (SIG) top line to remain weak and mark a YoY decline in the fiscal second quarter since the company’s credit portfolio outsourcing is likely to hurt its comps.

Sales by regions

Tiffany’s top line in the Americas rose 8% to $475, driven by higher spending by local customers. Sales increased across most of its regions. Sales continued to grow at a brisk pace in the Asia-Pacific region, led by strength in Greater China. Net sales in that region increased 28% to $301 million. An expanded stores base in China is likely to further support the top-line growth in the region in the coming quarters.

In Japan, net sales grew 11% to $155 million. Management stated that increased spending by local customers drove second-quarter sales. Europe showed signs of improvement with growth in the United Kingdom. Net sales increased 5%, driven by favorable currency translation rates and new store openings.