Tiffany added seven US stores this year in a diverse set of markets and will close a small store in Maui’s Whalers Village by year end.

Openings included Austin, Texas, a second store in Las Vegas, Natick, Massachusetts, Providence, Rhode Island, Red Bank, New Jersey and Santa Barbara, California and last month the company welcomed visitors to its new store at 37 Wall Street, which has had a very good start.

International Results

International results in most markets also continued at a strong pace in the third quarter with sales up 22% in dollars on a constant exchange rate basis, international sales rose 18% and comps are up 10%. The company’s remarks about international sales performance are on a constant exchange rate basis.

In Japan, total retail sales rose 6% in the quarter which was below expectations and resulted from a higher average price per jewelry unit sold.

It was comprised of a 2% increase in Tokyo, which included a 3% increase in the Tokyo flagship store and an 8% increase in other regions.

Comparable store sales declined 1% in the quarter, however, due to the extent of store openings, closings and relocations over the past year, which created a seven point spread between total sales and comp performance. Looking at total sales performance in Japan may be more relevant at the moment. In fact, over the past 12 months in Japan the company has opened six new locations and closed three boutiques and is achieving increased market penetration.

The 1% comp decline in the quarter ranged from a 3% increase in August versus a 5% decline last year to a 1% increase in September versus a 4% decline last year and a 5% decline in October on top of a 7% decline.

The environment remains challenging in Japan but the management believes that the company’s initiatives are generating the best possible results at this time and the total retail sales growth of 6% in the quarter and 1% in the year to date indicate progress. Finally, the Yen averaged 116 to the dollar I the third quarter versus 117 last year so the translation effect on results was insignificant.

In other international markets, sales certainly continued at a robust pace in the third quarter.

The Asia/Pacific region comp store sales rose 29% which was substantially better than the mid teens increase the company expected and was on top of a 17% increase in the prior year. Tiffany achieved double digit sales growth in every country in that region.

The company is pleased with the performance of new stores opened this year in Korea, Singapore, Hong Kong, Malaysia and Macao and plans to open stores in China in the coming months in the large cities of Tianjin and Chenyang.

In Europe comp store sales rose 14% which was in line with expectations and was on top of a 21% increase last year.

Sales were very strong in London, which represents more than half of the company’s European sales. There were large increases in most markets on the continent. These are very strong results and there was a large number of Europeans who are traveling and shopping in New York.

- This year Tiffany opened a fifth location in London in Selfridges Department Store and a store in Hamburg, Germany, with a store in Bologna, Italy scheduled to open in December.
- The company is doing very well in Canada, with strong growth in Toronto and excellent results at the new store in Vancouver.
- Sales are also growing in Mexico.

US direct marketing sales increased 4% in the quarter which was on top of an 11% increase last year but was below the mid teens expectations.

- The 4% sales increase was due to an increased amount spent per order.
- Catalog sales declined in circulation and was 15% lower in the quarter, which was roughly in line with the projected decline in mailings for the year.

The much larger part of direct marketing sales is ecommerce.

- The company has re-launched its web site in October with enhanced content, improved graphics and easier navigation.
- An increase of 137% in sales in the other channels was largely due to higher wholesales of diamonds acquired through the rough sourcing program but that are subsequently determined to not meet the company’s quality standards.

Sales also increased at Iridesse due to the addition of new stores.