The company is currently focused on editing the product assortment and seeking ways to increase brand awareness and store traffic. That covers sales in the four channels of distribution.

Statement jewelry at the very high end continued to post a sizeable increase in the third quarter.

Engagement jewelry was a strong performer with solitaire diamond ring sales up almost 20% in the US alone. The company even saw single digit increase in Japan, while band ring sales also posted big growth.

In fashion jewelry, the Charmed by Tiffany product and marketing initiative in silver and gold charms is paying off with strong growth in the US and many international markets as well as a modest increase in Japan. The named designer category was also up in the quarter and the company saw reasonably good growth in watches and in the tableware category.

The Celebration Rings campaign is maintaining popularity and broadening its appeal, the company’s continually expanding Legacy Jewelry Collection in diamonds and colored stones is very strong.

The company is pleased with the response to relatively new collections like the Tiffany Somerset Collection of gold and silver mesh designs along with Tiffany’s Swing, stars and hearts platinum diamond jewelry collection.

Gross margin was 53.7% in the third quarter versus 54% a year ago and below expectations.

The modest decline reflected higher wholesale sales of diamonds that were partly offset by reduced LIFO inventory charges. The company recorded a LIFO charge of $6.3 million in the quarter versus a charge of $10.4 million last year.

Selling, general and administrative expenses increased in the quarter with a large part of the increase due to labor and occupancy costs tied to new and existing stores as well as higher marketing expenses. However, SG&A expenses also included the $10 million contribution made to the Tiffany & Co. Foundation with proceeds from the sale of the Tokyo flagship store property. Excluding that contribution SG&A expenses rose 16% and the expense ratio improved from the prior year.

On the income statement the line item other operating income represents $105 million pre tax gain recorded from the sale of the property housing Tiffany’s Tokyo flagship store.

Other expense net was $2.3 million vs. income of $1.3 million last year which was related to pre tax gains associated with the sale of equity investments and marketable securities.

In total, the $6.8 million gain last year added approximately 3 cents per share to last year’s bottom line. Without those gains, other expense net would have been $5.5 million last year.

Effective tax rate from continuing operations of 34% in the third quarter was fractionally higher than last year’s rate.

Adding it all up, net earnings in the third quarter excluding the 48 cents gain from the sale of the Tokyo store and the 4 cents expense for the contribution to the Tiffany & Co. Foundation was 27 cents per diluted share.

Last year’s net earnings excluding the 3 cents gain from the sales of investments and securities was 18 cents per diluted share so when excluding those various items year over year earnings per diluted share rose 50% and exceeded the company’s expectations.

Tiffany has maintained an active pace of store expansion.

The company has opened seven new stores in the US and by year end Tiffany will have added a net of 12 new international locations. In total, increasing the worldwide number of company operated Tiffany stores by 11% and the square footage by 8%.

The company has also been active in product development and saw broad based growth in most jewelry categories in the quarter, ranging from diamonds to silver.

Tiffany’s classic designs and newer introductions represent a very powerful offering for customers.

During the quarter the company completed the sale on lease back of its flagship stores in Tokyo and London which was consistent with the company’s long term objectives to monetize those assets while being assured that the company can maintain its successful presence at those locations.