Revenues At Tiffany & Co. (NYSE:TIF) Soar In The Wake Of Successful Turnaround

Luxury retailer Tiffany & Co. (NYSE:TIF) beat the estimates of analysts in its first quarter results resulting in the full-year profit and sales forecast being raised. This is a testament to the fact that a strategy rolled out with a view to targeting millenials as well as selling household items has turned out to be successful as it has increased foot traffic. Shares of the luxury retailer rose by 20% following the release of the Q1 results.

The results also marked the highest jump in same-store revenues in four years. Growth was particularly strong in China and generally in Asia as well as in the United States. In Q1 same store sales increased by 7% against estimates of 2.6%. In the Asia-Pacific region sales increased by 28% while in Europe sales were up by 13%. Across the globe net sales increased by 15% and this was responsible for contributing to a 53% rise in net earnings. While analysts had been expecting $959.4 million in net sales the actual figure was $1.03 billion.

Engagement jewelry category

Some of the categories that stood out included engagement jewelry despite the fact that sales had previously been sluggish. The stellar results have prompted the luxury retailer to not only raise forecasts for the year but also disclose that it will be buying back shares worth $1 billion. For the fiscal year that ends in January 2019 the luxury retailer has projected between $4.50 and $4.70 in earnings per share. The prior earnings-per-share forecast was between $4.25 and $4.45.

As part of the turnaround strategy championed by the retailer’s new CEO, Alessandro Bogliolo, the product lines have been revamped and cheaper items added in order to better compete with the likes of Blue Nile and Pandora. Bogliolo, who joined the luxury retailer last year in October, said the pace of introducing new products would be accelerated with a view to retaining the interest of shoppers.

“We are definitely committed to renewing our product offering. Newness should flow in every year in every single part of this jewelry ecosystem of Tiffany,” said Bogliolo in a conference call with Wall Street analysts.

Bigger marketing budget

Besides revamping the product portfolio Tiffany also made investments in the development of its website besides boosting its store and marketing presentations. This however did not hurt margins as they actually rose from 62.1% to 63% year-over-year. Under Bogliolo Tiffany is also expected to increase its marketing budget and is already running a new advertising campaign known as ‘Believe in Dreams’ which features Elle Fanning, an actress in both digital and print ads. Additionally Tiffany has launched a jewelry innovation and design workshop located in Manhattan and this is expected to accelerate the pace of development for new products.

Bogliolo was preceded as CEO of Tiffany by Frederic Cumenal who had to resign earlier last year after a string of lackluster results. Prior to joining Tiffany Bogliolo ran Diesel SpA, an apparel firm based in Italy. He has also had executive stints at Bulgari and Sephora.