Harry Winston Q3 Sales Up 88%

Harry Winston, said that third quarter consolidated sales increased 88 percent year-over-year to $140.9 million, led by a two-fold increase in rough diamond sales from its Canadian mine and a 50 percent increase in its luxury jewelry retail operation.

Consolidated earnings totaled $13.7 million for the period, ended October 31, compared to a loss of $4.9 million for the third quarter of 2009. Consolidated net income for the third quarter was $3.9 million.

Rough diamond sales for the quarter rose 192 percent year-over-year to $60.7 million. The Toronto based company supplies rough diamonds to the global market from its 40 percent interest in the Diavik Diamond Mine, located in Canada’s Northwest Territories. Mining giant Rio Tinto owns the remaining 60-percent share of the mine. The increase in sales resulted primarily from a 182 percent increase in volume of carats sold.

Meanwhile, retail sales increased 48 percent for the quarter to $80.2 million. The company’s retail division, Harry Winston Inc., is a premier diamond jeweler and luxury timepiece retailer with salons in key locations including New York, Paris, London, Beijing, Tokyo and Beverly Hills.

Robert Gannicott, Harry Winston chairman and CEO said the insatiable appetite for hard luxury goods in China and other emerging countries is the main reason for Harry Winston’s strong third-quarter performance.

“Diamond demand in the Far East continues to propel rough diamond prices as the Diavik mine transitions to underground production,” Gannicott said. “Marketing efforts and store openings are successfully burnishing the Harry Winston brand to capture the branded luxury appetites of the emerging wealth of the newly developing parts of the world.”

Neiman Marcus Q1 Sales Up 6.7%, Core Customers Return but are Cautious

Luxury retailer Neiman Marcus, Inc. said Wednesday that revenues increased 6.7 percent to $927.2 million for the first quarter of fiscal year 2011. Comparable revenues increased 6.4 percent and operating earnings were $99.8 million compared to $74.8 for the same period of the prior year. Sales were driven by an increase in customer demand and higher levels of full-price sales, something the company has been the focusing on during the past year.

Specialty retail stores sales increased 5.5 percent to $761.1 million with comparable sales up 5.1 percent for the quarter. Operating earnings increased 22 percent to $108 million. The company’s direct business sales (Internet and catalog) increased 12.8 percent to $166.1 million—led by a 16.9 percent increase in Internet sales to $139 million, offsetting a 4.6 percent decline in catalog revenue.

Prior to the recession, Neiman Marcus defined its core customer as spending $12,000 per year at its store. Karen Katz, Neiman Marcus new CEO, said that customer has returned but is spending more thoughtfully and is looking for value.

“I would generally say the core customer is actually shopping,” Katz said. “(But) she is being much more deliberate in how she’s shopping so her spending is not back up to the levels of pre-recession and we don’t have an expectation that it will get back to that level. As a result the way we are thinking about our strategy is that we need to attract other affluent customers into the Neiman Marcus group.”

Katz noted the most affluent customers are again purchasing the highest priced items but other consumers are slow to return to buying more affordable luxury items. This caused the company to make some changes to pricing strategy.

“Generally speaking, things at the high end are doing very well,” Katz said. “We went through what we call the rebalancing of profit in terms of price point. We needed to fill in better in the middle and the opening price points of what we offer and those where we’ve done that we actually had nice success with it. Our handbags division for an example, everything had grown to the high end in handbags and we came back and balanced out the prices there with existing vendors and it’s worked extremely well. And we think that that is helping fuel the success of our handbag business right now.”

Neiman Marcus Internet Sales Up 12.8 percent, New CEO looks to Reach Customers through Mobile Devices

Karen Katz photo by Jeanne Prejean

Neiman Marcus’ direct business sales (Internet and catalog) increased 12.8 percent year-over-year to $166.1 million in the first quarter of the 2011 fiscal year—led by a 16.9 percent increase in Internet sales to $139 million, offsetting a 4.6 percent decline in catalog revenue. Karen Katz, the new CEO, said the company will continue to invest in Internet and social media initiatives.

“At the heart of our strategy is an idea that a customer should be able to shop a Neiman Marcus group brand anytime, anywhere and anyplace she chooses,” Katz said during an earnings conference call Wednesday.

The luxury retailer’s e-commerce business includes Web sites for its Neiman Marcus brand, its Last Call clearance brand and Horchow, its catalog and Internet business that offers home furnishings, linens, decorative accessories and tabletop items.

Now Katz, who replaced Burt Tansky as CEO in October, said she is trying to reach customers through their mobile devices.

The company recently introduced a Neiman Marcus gift app for iPhone and iPad, a The Shoe Salon Bergdorf Goodman iPhone app (pictured left) with an emphasis on affordable gifts, a gift of the day and gift suggestions at different price points, Katz said. There’s an interactive iPad app for all Neiman Marcus catalogs in which users can shop right from the catalog.

“There’s clearly a need as the customer is getting more connected between their mobile devices, their iPads and those kinds of things we really have to ramp up how we’re connecting with the customer in that way,” she said. “Obviously we have a large e-commerce business and we are going to continue to fuel that but even in our stores we’re studying how to be better connected with our customers."

Harry Winston’s Growth Ends in Q3

Harry Winston salon in Paris

Harry Winston Diamond Corp., the luxury retail jeweler and supplier of rough diamonds, saw its retail sales slow to a crawl and its diamond business take a nosedive for the third quarter of fiscal 2012.

Sales in the Toronto-based company’s mining segment fell 40 percent, year-over-year, to $36.2 million for the quarter, ended October 31. Rough diamond production for the period increased 8 percent to 800,000 carats for the period. Harry Winston has a 40 percent ownership stake in the Diavik Diamond Mine in Canada’s Northwest Territories. Mining giant Rio Tinto owns the other 60 percent.

For the luxury brand segment, sales increased 4 percent, year-over-year, to $83.5 million compared to $80.2 million in the same quarter of the prior year. At constant exchange rates, sales decrease by 4 percent. Harry Winston is a premier diamond jeweler and luxury timepiece retailer with luxury salons in key locations around the world.

“Challenging trading conditions returned to the diamond business internationally in the third quarter,” said Robert Gannicott, Chairman and CEO. “However, this was not the sudden, hard shock of 2008/2009 and, being better equipped to weather a downturn than in 2008/9, we elected not to sell the full rough diamond production into a weak market during the quarter but continued to supply the segments where demand remained resilient. We have now resumed a wider range of rough diamond sales as the market has recovered some poise in the light of continuing good consumer demand. Our luxury brand segment has seen increased unit sales as we continue to broaden the focus of our jewelry and timepieces.”

Rough diamond price during the third quarter was $159 per carat from 200,000 carats sold compared to $95 per carat from 600,000 carats sold in the comparable quarter of the prior year, the company reported. The price difference is primarily the result of the stockpiling of some lower priced diamond assortments which currently face competition from the recent sale of stocks of similar quality Zimbabwe diamonds. At October 31, 2011, the company was holding 1.1 million carats of rough diamond inventory with an estimated value of $123 million at current market prices.

Mining segment EBITDA was $16.7 million in the quarter compared to $24.9 million in the comparable quarter of the prior year. After accounting for the $13 million ($8.4 million tax effected) non-cash de-recognition charge related to a backfill plant no longer needed in revised underground mining methods, this segment recorded an operating loss of $3.3 million. Excluding this charge, the mining segment would have recorded an operating profit of $9.7 million in the third quarter compared to $9.4 million in the same quarter of the prior year.

The luxury brand segment generated EBITDA of $4.5 million and an operating profit of $1.3 million in the third quarter 2012 compared to EBITDA of $8.6 million and operating profit of $5.4 million in the comparable quarter of the prior year. The decreased operating profit is a result of the seasonal increased marketing expenditure leading into the holiday season and expenses related to the anticipated opening of new salons in China during early 2012.

The Company had $83.2 million of cash and $106.2 million availability in its credit facilities as of October 31.

Tiffany Q3 Sales Up 27%

As the holiday shopping season begins Tiffany & Co. appears poised to take full advantage. 

The luxury jewelry retailer said Wednesday that worldwide net sales for the third quarter increased 14 percent to $681.7 million, with growth in all geographic regions. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net and comparable store sales increased 12 percent and 7 percent, respectively. 

The sales increase and a higher operating margin contributed to a higher-than-expected 27 percent increase in net earnings for the period, ended October 31, the company said. Net earnings from continuing operations adjusted to exclude nonrecurring items increased 43 percent.

"As third quarter results demonstrate once again, Tiffany's expanding, globally diversified store presence provides a significant platform to generate sustainable sales and earnings growth," said Michael J. Kowalski, Tiffany chairman and CEO.

Sales in the Americas region, which includes the U.S., Canada and Latin/South America, increased 9 percent to $331.8 million in the third quarter. On a constant-exchange-rate basis, sales increased 9 percent and comparable store sales increased 5 percent. Sales at Tiffany’s flagship store in New York declined by 3 percent for the period. Branch store sales in the Americas increased 8 percent. Internet and catalog sales in the Americas increased 7 percent fir the quarter. 

Sales in Japan rose 12 percent to $130.8 million in the third quarter.  On a constant-exchange-rate basis, sales increased 2 percent. Comparable retail store sales declined 2 percent for the quarter. 

Sales in Asia-Pacific increased 24 percent to $127.1 million in the third quarter. On a constant-exchange-rate basis, sales increased 20 percent in the quarter, due to strong growth in most countries, the company said. Comparable store sales rose 11 percent.

Sales in Europe increased 22 percent to $77.5 million in the third quarter and 29 percent on a constant-exchange-rate basis. Sales increased 29 percent in the quarter, with double-digit percentage growth in the U.K. and most of continental Europe, the company said.

Other sales increased 26 percent to $14.6 million in the third quarter due to increased wholesale sales of finished goods to independent distributors within emerging markets; wholesale sales of rough diamonds increased in the year-to-date. 

"We are quite pleased with the performance of new stores and recent product introductions including the yellow diamond and leather goods collections," Kowalski said, adding that the company is increasing its full-year outlook.

For the full year, ending January 31, 2011, worldwide sales are projected to increase by 12 percent, the company said. By region, sales for the year are expected to increase approximately 10 percent in the Americas, by a mid-twenties percentage in Asia-Pacific, by a low-single-digit percentage in Japan and by a high-teens percentage in Europe, the company said. Other sales are expected to decline modestly.

Pandora Produces Charming Q3 Sales and Profit Gains

Danish jewelry company Pandora said Tuesday that third quarter revenue increased 14.3 percent, year-over-year, to DKK 1.79 billion ($308 million) with double-digit gains across all geographical markets. Net profit for the period increased by 11.4 percent to DKK 380 million ($65.2 million).

This is a strong turnaround when compared with second quarter results in which the company—best known for the manufacture, distribution and marketing of silver charm jewelry—said its sales fell by 9.5 percent to 1.26 billion DKK ($210.2 million) with profit during the same period down 89.9 percent to 63 million DKK ($10.5 million).

Pandora also said Tuesday that its stock balancing plan (replacing discontinued stock) is continuing as planned. In the third quarter, the company received returns of discontinued products with a wholesale value of DKK 86 million ($14.7 million), and replaced it with merchandising costing DKK 127 million ($21.8 million). In 2012 Pandora received returns of discontinued products valued at DKK 609 million ($104.6 million), and replaced DKK 599 million ($102.8 million).

Revenue by geographic region is as follows:

• Americas increased by 21.9 percent (9.5 percent in local currency), with U.S. sales up 15.8 percent (2.6 percent in local currency).
• Europe increased by 13.1 percent (11 percent in local currency).
• Asia Pacific decreased by 10.7 percent (17.3 percent in local currency).

Branded revenue as percentage of total revenue increased to 81.3 percent, compared with 73.6 percent in third quarter of 2011. Gross margin was 64.1 percent, compared with 73.6 percent in the third quarter of 2011.

EBITDA margin was 28 percent, compared with 34.2 percent in Q3 2011, a decrease of 6.2 percent to DKK 503 million ($86.3 million). EBIT margin was 25.8 percent compared with 32.2 percent in Q3 2011, an 8.5 percent drop to DKK 463 million ($79.5 million).

The company, which sells its jewelry through retail jewelers and its own branded retail stores, updated its outlook, saying it expects revenue for 2012 to be above DKK 6.3 billion ($1.08 billion), from its previous guidance above DKK 6 billion.

“I am happy to report that we continue to perform in line with our ‘18 months turn-around plan,’” said Björn Gulden, Pandora CEO. “Third quarter developed even a little better than we expected and we have, based on the tailwind from the currency development, decided to slightly upgrade our revenue guidance. One of our major initiatives ‘The stock balancing campaign’ was continued, mainly impacting the U.S. and third-party distribution, during Q3 2012. We have now largely concluded the campaign and it will, as communicated earlier, be finished by end of 2012.”

Gulden added its spring merchandise sold well and its fall merchandise had a strong start for the third quarter.

“The year is not yet finished,” he said. “We have our most important quarter to come, but we feel confident that our improved product, our lower prices and our other operational improvements will put us in the position of achieving our updated financial goals for the full year.”

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

Zale Q4 Comps Up 5.6%, Revenue Loss Narrows to $8 Million

Comps at Zales Jewelers (pictured) and Zales Outlet increased 8.1%.

Fine jewelry retailer Zale Corp. said Wednesday that year-over-year revenues for the fourth quarter increased 2.4 percent to $417 million. Comparable store sales for the period increased 5.6 percent. This increase follows an 8.3 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 5.8 percent.

Net loss in the fourth quarter for the company, which owns retail jewelry chains in the US, Canada and Puerto Rico, narrowed to $8 million, or 25 cents per share, compared to a net loss of $20 million, or 61 cents per share, in the fourth quarter of fiscal 2012.

Other fourth quarter highlights include:

* Zales branded stores, Zales Jewelers and Zales Outlet, posted a comparable store sales increase of 8.1 percent. This follows a 12.3 percent rise in the same period last year.

* U.S. fine jewelry brands, including Zales branded stores and regional brand, Gordon’s Jewelers, posted a comparable store sales increase of 7.2 percent. This follows an 11.2 percent rise in the same period last year.

* Peoples branded stores posted a comparable store sales increase of 5.6 percent. This follows a 4.7 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 7 percent in the fourth quarter of fiscal 2013, following an increase of 9.9 percent in the same period last year.

* Canadian fine jewelry brands, Peoples Jewellers and Mappins Jewellers, posted a comparable store sales increase of 3.3 percent. This follows a 2 percent rise in the same period last year. At constant exchange rates, comparable store sales increased 4.7 percent in the fourth quarter of fiscal 2013, following an increase of 7.1 percent in the same period last year.

* Piercing Pagoda, Zale’s kiosk jewelry business, posted a comparable store sales increase of 0.3 percent. In the same period last year, comparable store sales rose 2.7 percent.

Gross margin on sales rose sharply to $222 million, or 53.1 percent, compared to $210 million, or 51.6 percent, in the fourth quarter of fiscal 2012. Operating margin increased 120 basis points.

Operating loss was $3 million, or 0.7 percent of revenues, compared to an operating loss of $8 million, or 1.9 percent of revenues, in the fourth quarter of the prior year.

For the 2013 fiscal year, the company reported a six-year high in net earnings of $10 million, or $0.24 diluted earnings per share, up $37 million, or $1.09 per share. The company said this is a six-year high.

Comparable store sales rose 3.3 percent for the year with Zales branded stores up 4.7 percent and Peoples branded stores up 4.8 percent at constant exchange rates. Gross margin was up 60 basis points to 52.1 percent and operating margin increased 90 basis points to 1.9 percent.

“For the year we achieved a significant milestone by delivering our highest net income in six years,” Theo Killion, Zale Corp. CEO, said in a statement.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

Tiffany Q2 Earnings Up 16%, Global Sales Up 4%

Exceptional growth in China along with improvements in operating margins led to a better-than-expected 16 percent net earnings increase to $107 million, or $0.83 per diluted share, in the second quarter for Tiffany & Co.

Worldwide net sales for the New York-based luxury jeweler rose 4 percent to $926 million. On a constant-exchange-rate basis, worldwide net sales rose 8 percent, and comparable store sales rose 5 percent due to sales growth in most regions.

As a result, the company raised its year-end outlook to $3.50-$3.60 per diluted share, from $3.43-$3.53 per diluted share in its first quarter outlook. It also plans to continue its worldwide expansion of stores unabated.

In addition to regional growth, product categories also performed well, according to Tiffany’s second-quarter earnings report released Tuesday. The results were dampened a bit by lower-than-expected sales growth in the US and the drastic decline of the Japanese Yen.

Mark L. Aaron, Tiffany VP-Investor Relations, said in a conference call Tuesday that growth in fine jewelry and statement jewelry were extremely strong and outperformed modest growth in fashion jewelry. He added that diamond jewelry, led by colored diamonds, did well particularly well for the period.

Gross margin (gross profit as a percentage of net sales) increased to 57.5 percent in the second quarter from 56.3 percent a year ago. Aaron said this was the result of diminishing product cost pressure and price increases taken earlier in the year. This help lead to a “better-than-expected” improvement in operating margin.

“We were pleased with the results of our efforts to improve gross margin which, combined with well-controlled expenses, yielded a solid increase in operating margin,” added Michael J. Kowalski, Tiffany chairman and CEO.

Sales by region are as follows:

* In the Americas, total sales increased 2 percent to $444 million in the second quarter. Comparable store sales were unchanged in the quarter, led by growth in Tiffany’s New York flagship store sales. Aaron noted that sales in the US were lower than expected and were mixed throughout the country with no discernible pattern.

* Total sales in the Asia-Pacific region rose 20 percent to $208 million in the second quarter. On a constant-exchange-rate basis, total sales also rose 20 percent and comparable store sales increased 13 percent, “led by especially strong sales growth in Greater China,” the company said in its report.

* Aaron focused a great deal of time on Japan where the company operates 54 stores. The negative translation effect from a substantially weaker yen caused total sales to decline 14 percent to $136 million in the second quarter. However, he noted that on a constant-exchange-rate basis, total sales increased 7 percent in the second quarter, due to comparable store sales growth of 8 percent with strong growth in engagement and higher-end jewelry categories.

* Total sales in Europe rose 11 percent to $111 million in the second quarter. On a constant-exchange-rate basis, total sales rose 10 percent and comparable store sales rose 7 percent due to sales growth in the United Kingdom and most of continental Europe.

* Sales classified as “Other” sales increased 33 percent to $26 million in the second quarter, primarily reflecting the conversion in July 2012 of five Tiffany & Co. stores in the United Arab Emirates from independently-operated to company-operated. The company said it expected to increase its presence in the Middle East.

Tiffany opened three stores in the second quarter, including its ninth in Hong Kong store. Other openings were in, in Verona, Italy and in Villahermosa, Mexico. The company closed a store in Tokyo, due to the mall the store was in closing for long-term renovations, Aaron said.

The company in the second quarter operated 277 stores (116 in the Americas, 67 in Asia-Pacific, 54 in Japan, 35 in Europe and five in the U.A.E.), versus 260 stores (106 in the Americas, 61 in Asia-Pacific, 55 in Japan and 33 in Europe and five in the U.A.E.) a year ago.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

Pandora’s Troubles Continue as Q2 Profit Falls 90% and Revenue Drops 9.5%

Pandora Group, home of the international silver jewelry brand that became famous for its charm jewelry, had another disappointing quarter.

The Danish company with manufacturing facilities in Thailand said that year-over-year sales for its Pandora branded jewelry fell by 9.5 percent to 1.26 billion Danish krone ($210.2 million) in the second quarter of 2012. Profit during the same period fell 89.9 percent to 63 million Danish krone ($10.5 million).

Pandora reported losses in every region it operates. The company noted that a stock rebalancing campaign launched in the first quarter is a major reason for the disappointing results, which the company said are in line with expectations. It said it received returns of discontinued products valued at 183 million krone ($30.5 million) and replaced it with 310 million Danish krone ($51.7 million) worth of new inventory.

Björn Gulden, Pandora CEO, said the company will continue with the stock rebalancing program and will cap it at 800 million krone ($133.5 million).

“The execution on the stock balancing campaign continued into Q2 2012 and was very well received by our retail partners across all our markets,” Gulden said. “Even though the stock balancing campaign, short-term, hurts our revenue, cost ratio and profitability in 2012, the campaign has proven to be the right action to help our retailers improve the quality of their stock.”

By region, revenue results are as follows:

* Americas decreased by 5.1 percent (14.6 percent decrease in local currency)

* Europe decreased by 16.6 percent (17.4 percent decrease in local currency)

* Asia Pacific decreased by 8.1 percent (14.1 percent decrease in local currency)

Branded revenue as percentage of total revenue increased to 75.3 percent in the second quarter of 2012, from 73.4 percent in Q2 2011; and gross margin was 67.9 percent in Q2 2012, compared to a gross margin of 74.4 percent in Q2 2011.

Pandora projects revenue for 2012 to be above 6 billion krone ($1 billion), down from 6.66 billion krone ($1.1 billion) in 2011.

“Feedback from our retailers on our Autumn/Winter 2012 collection has been very encouraging and with an additional 94 new Concept stores opened in H1 2012, we are on track to deliver on what we have promised the market in our financial guidance for the full year,” Gulden said.

Pandora also announced a number of organizational changes. Among them:

* Scott Burger, former COO of Pandora North America, was named president for Pandora North America, succeeding John White, who is taking up a position outside Pandora.

* Sten Daugaard, chief development officer, has been assigned to head Pandora's Asian headquarters in Hong Kong “in order to secure senior management attention to an important future region.”

* David Allen, former VP of Sales of Pandora Australia, has been named president of Pandora Australia with the responsibility for commercial operations in Australia, New Zealand and the Pacific, succeeding Karin Adcock, who retired as planned on July 1.

Please join me on the Jewelry News Network Facebook Page and on Twitter  @JewelryNewsNet. 

Harry Winston Q1 Consolidated Sales Up 26%

Harry Winston salon in Paris

Harry Winston Diamond Corp. seems to have the best of both worlds with its businesses in diamond mining sector and as a luxury jewelry and watch retailer. Both market segments have shown strong growth over the past year and this is continuing as the Toronto-based company reported Wednesday that consolidated sales increased 26 percent for the first quarter of fiscal year 2012. The increase at constant exchange rates was 22 percent.

Luxury brand sales, through its network of salons that sell luxury jewelry and watches in key cities throughout the world, increased 26 percent to $81.9 million for the quarter, ended April 30, primarily driven by stronger high jewelry sales in the United States and higher timepiece sales. The increase at constant exchange rates was 20 percent.

In addition, Harry Winston, which supplies rough diamonds to the global market from its 40 percent ownership interest in the Diavik Diamond Mine in Northwestern Canada, said mining sales increased 27 percent to $62 million, primarily due to higher rough diamond pricing versus the comparable prior year period. Rough diamond output, for the period ended March 31, dropped to 500,000 carats compared to 600,000 carats for the same period last year.

“This quarter's results reflect improving rough diamond prices combined with increasing sales and profit for the luxury brand segment. Both sides of our diamond business are performing well as we continue to achieve premium rough diamond prices and execute our luxury brand strategy,” said Robert Gannicott, Harry Winston Chairman and CEO.

To shore up its stockpile of polished diamonds it uses for luxury jewelry lines and to maximize the continued rise in prices for what many believe is a dwindling resource; Harry Winston in May announced that it is involved in the establishment a polished diamond investment fund. The fund is being managed by Diamond Asset Advisors AG, a Zurich based advisor with a background in both the diamond and financial services sectors. The fund will be structured as a limited partnership, of up to $250 million, offering institutional investors direct exposure to the wholesale market price of polished diamonds.

“Our recently announced relationship with Diamond Asset Advisors in the creation of a polished diamond acquisition fund represents an innovative way for the company to support its luxury brand growth objectives,” Gannicott said.

Other first quarter highlights, include:

* Consolidated EBITDA (earnings before interest taxes depreciation and amortization) in the first quarter of Fiscal 2012 increased 51 percent to $25 million, showing strength in both segments of the business, the company said. In the same period, the mining segment EBITDA increased 48.5 percent to $17.6 million and the luxury brand segment EBITDA increased 57.3 percent to $7.3 million.

* Consolidated operating profit was $4.7 million or double the operating profit of $2.3 million from a year ago, with mining operating profits down $300,000 and luxury brand profits up $2.7 million versus the prior year. Operating profit benefited from higher rough diamond prices and higher high-end jewelry and timepiece sales, the company said.
 
* Consolidated net profit attributable to shareholders for the first quarter was $3.6 million or $0.04 per share compared to net profit attributable to shareholders of $2.1 million or $0.03 per share in the comparable quarter of the prior year.

Neiman Marcus Q3 Sales Up 10%, Net Earnings Up 150%

Neiman Marcus reported a year-over-year increase in revenues of 9.9 percent to $983.8 million for its fiscal third quarter. Comparable revenues increased 9.7 percent. Operating earnings for the period ended April 30 increased 45 percent year-over-year to $123.2 million.

The Dallas-based luxury retailer said Friday that net earnings totaled $46.2 million for the 13-week period compared to $18.5 million in the prior year, a staggering 149.7 percent increase. EBITDA increased 23 percent to $169.9 million for the period.

For the 39 weeks ended April 30, the company reported total revenues of $3.08 billion compared to $2.87 billion in the prior year. Comparable revenues increased 7.3 percent. The Company recorded operating earnings for the 39 weeks ended April 30, 2011 of $312.3 million compared to $227.3 million for the comparable period a year ago, an increase of 37 percent.

The company’s year-over-year net earnings rose 200.9 percent to $93 million for the 39-week fiscal period, ended April 30. EBITDA increased 18 percent for the period to $457.2 million.

Signet Q1 Same Store Sales, Total Sales Up 10%

Signet Jewelers, the world’s largest specialty retail jeweler, reported strong sales results for the first quarter of FY 2012 led by a 10.2 percent increase in same store sales, compared to a rise of 5.8 percent for the first quarter of the prior year. Total sales for the period, ended April 30, also rose 10.2 percent to $887.3 million.

Operating income for the Bermuda-based company, which operates jewelry retail chains in the U.S. and U.K., improved by 310 basis points to 13.4 percent. As a result, income before income taxes and diluted earnings per share rose to $117.8 million, compared with $74.1 million during the prior fiscal year.  

“We are very pleased with our strong start to the year, leading to record results for the first quarter. Our performance was led by our U.S. division, with the U.K. division continuing to operate well in a challenging economy,” said Mike Barnes, Signet Jewellers CEO  “The strong sales momentum has continued into the start of the second quarter ... We remain well positioned to continue to increase sales productivity and achieve our financial objectives for this year.”

In the U.S., which accounted for 83.2 percent of total company sales for the period, sales increased 11.4 percent to $738 million. Same store sales rose 12.5 percent for the period. Signet operates 1,314 in the U.S., under the brands Kay Jewelers, Jared The Galleria Of Jewelry and a number of regional brands.

At Kay Jewelers, the company’s largest retail chain operation and the largest retail jewelry operation in the U.S., sales rose 13.4 percent to $435.4 million with same store sales up 13.9 percent. The average selling price was $360, a year-over increase of 11.8 percent. At Jared, total sales rose 12.7 percent to $227.8 million. Same store sales increased 11.8 percent for the period. The average selling price per unit for the period was $798, a 7.7 percent increase compared to the prior year.

In the U.K., which accounted for 16.8 percent of total company sales for the period, sales rose 4.5 percent to $149.3 million, mostly due to the strength of the British pound over the U.S. dollar. When the exchange rates were removed sales fell for the period by 1.3 percent. Same store sales rose 0.2 percent. Signet operates 538 stores in the U.K. under the brands H.Samuel, Ernest Jones and Leslie Davis.

 
On May 24, Signet, which trades on the New York Stock Exchange, entered into a $400 million senior unsecured multi-currency, five-year revolving credit facility agreement that will be used for working capital requirements and general corporate purposes. The new loan replaces an existing $300 million credit account entered in June 2008, which was due to expire in June 2013.

Signet operates approximately 1,852 specialty retail jewelry stores.

Tiffany Q1 Sales Up 20%, Profits Up 26%

Tiffany & Co. on Thursday reported that worldwide net sales increased 20 percent to $761 million while net earnings rose 26 percent to $81.1 million due to sales growth and improved margins. Management increased its earnings forecast for fiscal 2011 based on this higher than expected performance.

“We are pleased with the very strong start to the year,” Michael J. Kowalski, Tiffany chairman and CEO, said in a statement. “We achieved healthy sales growth in most regions, were able to improve gross margin despite higher product costs and achieved a significant increase in our operating margin.”

On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales and comparable store sales increased 16 percent and 15 percent, respectively, the New York-based luxury jewelry retailer said.

Net sales highlights by region for the quarter ended April 30 are as follows:

* In the Americas, which includes the U.S., Canada and Latin America, sales increased 19 percent to $374.7 million. On a constant-exchange-rate basis, total sales and comparable store sales rose 18 percent and 17 percent, respectively. Comparable Americas' branch store sales increased 15 percent and sales in the New York flagship store rose 23 percent. Combined Internet and catalog sales in the Americas rose 14 percent.

* Asia-Pacific sales increased 37 percent to $167.2 million. On a constant-exchange-rate basis, sales increased 31 percent and comparable store sales rose 26 percent due to substantial growth in most countries, particularly in the greater China region.

* Sales in Japan rose 7 percent to $123.4 million. On a constant-exchange-rate basis, both total sales and comparable store sales declined 3 percent. Stores that had closed due to the earthquake have since re-opened. Comparable store sales on a constant-exchange-rate basis increased in February, declined in March and rose in April.

* In Europe, sales increased 25 percent to $85.6 million. On a constant-exchange-rate basis, sales increased 19 percent while comparable store sales rose 15 percent due to strong growth in Continental Europe and modest sales growth in the U.K.

* Other sales declined 18 percent to $10.1 million. A decline in wholesale sales of rough diamonds more than offset increased wholesale sales of finished products to independent distributors within emerging markets.

The company currently operates 232 stores (96 in the Americas, 55 in Japan, 52 in Asia-Pacific and 29 in Europe), versus 221 a year ago.

Tifffany plans to open 19 new stores this year with—seven in the Americas, four in Europe and eight in Asia-Pacific, while closing a store in Japan.

“Worldwide sales growth in the early part of this second quarter is continuing to exceed our expectation, with solid performance in most regions,” Kowalski said. “Based on the better-than-expected first quarter results, we are increasing our earnings forecast for the year to $3.45 - $3.55 per diluted share (not including nonrecurring expenses) from $3.35 - $3.45 per diluted share previously.”

The company said that for the year, ended Jan. 31, 2012, it expects a net earnings increase of 18 percent.

It forecasts a mid-teens percentage increase in worldwide net sales. By region, it expects a mid-teens percentage increase in sales in the Americas, a mid-twenties percentage increase in both Asia-Pacific and Europe, and a modest sales decline in Japan.

Signet Jewelers Sales Up 1.4%; Comps Up 1.2%; Calendar Shift Affects Sales

Signet Jewelers Ltd., the largest specialty retail jeweler in the U.S. and U.K., said Thursday that sales for the first quarter increased 1.4 percent to $900 million. Same store sales for the period, ended April 28, increased 1.2 percent. The company said a calendar shift due to a late Mother’s Day adversely impacted sales by an estimated $32 million or 370 basis points.

The Bermuda-based company reported that income before taxes rose 9.1 percent to $128.5 million and diluted earnings per share increased 10.3 percent to $0.96.

“We anticipated the impact of the Mother’s Day promotional calendar shift and managed our business accordingly,” said Mike Barnes, Signet CEO. “In the second quarter to date, which benefited from the calendar shift, our same store sales, including Mother’s Day, were up strong double-digits.”

The retailer said it provided guidance in the second quarter “due to the complexity of the calendar shift.” It expects same store sales in the second quarter to high single digit range and fully diluted earnings per share are expected to range from $0.78 - $0.84 based on an estimated 84 million weighted average shares outstanding.

In the company’s U.S. division, (which generally accounts for about 80 percent of the company’s total sales) sales increased 1.8 percent to $751.5 million. Same store sales were up 1.2 percent and were impacted by 440 basis points due to the calendar shift. Signet’s brands in the U.S. include Kay and Jared jewelry stores and several regional brands.

In the UK division, sales declined 0.8 percent to $148.5 million. Same store sales were up 1.2 percent (13 weeks ended April 30, 2011: 0.2%). Signet’s brands in the U.K. include H.Samuel and Ernest Jones.

Other financial highlights for the first quarter include:

* The gross margin was $353.7 million, representing 39.3 percent of sales.

* Gross margin in the U.S. increased $5.8 million compared to the first quarter of the prior year, driven by a favorable gross merchandise margin movement of 40 basis points, leverage on store occupancy expenses and increased income from credit related fees, partially offset by an impact of $4.7 million on the U.S. net bad debt expense, due to a change in the number of credit billing cycles included in the quarter.

* Gross margin in the UK was $1.8 million lower than that of the first quarter of the prior year, primarily as a result of an unfavorable foreign currency impact and a decline in gross merchandise margin of 170 basis points attributed to the level of promotional activity and merchandise mix, which were partially offset by lower store occupancy and store operating expenses.

* Selling, general and administrative expenses were $264.5 million, or 29.4 percent of sales.

* Other operating income, net, increased to $40.2 million, or 4.5 percent of sales.

* Net operating income was $129.4 million, up $10.7 million or 9 percent.

* In the US division, net operating income was $137.7 million, up $11.5 million or 9.1 percent.

* In the UK division, net operating loss was $3 million, up $2.8 million.

U.S. and E-Commerce Businesses Fuel 10.4% Jump in Signet’s Q1 Sales

Signet Jewelers Ltd., the largest specialty retail jeweler in the U.S. and the U.K., said first quarter sales increased 10.4% year-over-year to $993.6 million. Same store sales increased 6.4% compared to a rise of 1.2% for the same period in the previous year. E-Commerce sales rose 40.7% to $31.1 million.

Operating income increased 10.4% to $142.8 million and diluted earnings per share rose 17% to $1.13 for the company that owns the Kay, Jared and Ultra jewelry retail chains in the U.S. and the H.Samuel and Ernest Jones jewelry retail chains in the U.K.

The U.S. division, which accounts for approximately 86 percent of total company sales, again was the driver in the strong performance. Total U.S. sales increased 14.3% to $858.6 million. Same store sales increased 8.1% compared to an increase of 1.2% for the period. The increases were driven by broad based strength across all merchandise categories in their Kay and Jared jewelry chains, as well as its recent acquisition of the Ultra jewelry store chain. E-Commerce sales increased 48% to $25.6 million.

“We were very pleased with our results throughout the quarter, including Valentine’s Day and the run up to Mother’s Day,” said Mike Barnes, Signet CEO.

The UK division, which accounts for approximately 14 percent of total company sales, reported weak results. Total sales fell 9.1% to $135. Same store sales fell 2.3% compared to an increase of 1.2% in the first quarter Fiscal 2013. The company said the sales decline was due to a same store sales decrease of $3.1 million primarily in H.Samuel, the impact of closed stores of $4.8 million, and currency fluctuation of $5.6 million. In Ernest Jones, the number of transactions increased and there was strength in the bridal business and watches (excluding Rolex, which is being offered in fewer stores in the UK). In H.Samuel, the number of transactions declined, resulting in lower sales across most merchandise categories. E-Commerce was a bright spot, increasing 14.5% to $5.5 million.

In its guidance, Signet says it expects the shift of Mother’s Day sales this year partly into the first quarter to impact second quarter sales and earnings performance. In addition, integration costs and the seasonality of the company’s newly acquired Ultra Stores are expected to dilute profits. The company expects Ultra to be a positive contributor to the company’s bottom line by the fourth quarter.

The company also said it plans to open 70 to 80 Kay and Jared stores by the end of the fiscal year.
Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

Pandora Jewelry Returns to Strong Profit And Growth

Pandora—whose short history as a publicly traded company was marked by spectacular growth followed by an even more spectacular fall—is back on track dramatically increasing its sales and profit for the first quarter of 2013.

The Danish company, known for its popular charm bracelets, said Tuesday that group revenue for the period increased 40 percent year-over-year to 2.002 billion Danish krones ($348.6 million). Profits increased 29.6 percent DKK 438 million ($76.3 million).

The international company—which manufactures, distributes, retails and markets its branded jewelry—reported extremely strong increases in all regions of the world where it operates. Its regional breakdown for the first quarter is as follows:

* Americas: Up 38 percent (38.6 percent in local currency);
* Europe: Up 50.4 percent (50.6 percent in local currency); and
* Asia Pacific: Up 26.1 percent (27.7 percent in local currency).

The company noted that as it expected, gross margin fell to 65.6 percent for the period, compared to a gross margin of 71.6 percent in the first quarter of 2012. The company did not give a reason for this expected drop. 

“Although it is still early in the year, we have had a strong start,” said Pandora CEO Bjørn Gulden, who will leave the company at the end of the month to join sports brand Puma. “Revenue and earnings increased across all regions, positively impacted by the delivery of the Valentine's Day collection in Q1 2013, instead of, as historically, in the fourth quarter. Even more importantly, our sales-out in ‘Concept’ stores (branded stores owned by the company) has also strengthened with double digit growth in our four major markets. Some of this increase is due to the fact that Easter was in Q1 this year compared to Q2 last year, but we believe most of it is due to better products, improved marketing and better execution in the stores.”

The company’s financial guidance was unchanged from the prior quarter. It expects revenue of to be above DKK 7.2 billion ($1.25 billion) and expects an EBITDA margin above 25 percent.

Other highlights of the first quarter 2013 report

* EBITDA increased by 60.3 percent to DKK 643 million ($112 million), corresponding to an EBITDA margin of 32.1 percent, compared to an EBITDA margin of 28.2 percent in the first quarter of 2012.
 
* Free cash flow was DKK 406 million ($70.6 million), compared to DKK 118 million ($20.5 million) in the first quarter of 2012.
 
* Pandora bought back 398,153 shares corresponding to DKK 61 million ($10.6 million) as part of the on-going DKK 700 million ($121.8 million) share buyback program.
 
* Pandora expects to open approximately 150 Concept stores in 2013.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

LVMH Q1 Watch and Jewelry Sales Up 28%

LVMH Moët Hennessy Louis Vuitton reported that sales for its Watches & Jewelry business rose 28 percent to 261 million euros ($371.2 million) for the first quarter of 2011 supported by the “excellent performance” of its own boutiques and its multi-brand retail stores as well as its recent watch introductions.

The company’s watch-making brands revealed their innovations at Baselworld, the world’s largest watch and jewelry trade fair. TAG Heuer strengthened its iconic Carrera collection of chronographs. Zenith, which performed well for the quarter, continued the renovation of its manufacturing facility in Le Locle, Switzerland. Hublot benefited from the strong momentum of its Big Bang and King Power lines and the opening of its own boutiques, most notably Place Vendôme. Chaumet's new Bee My Love collection “was very well received.” And De Beers made “significant progress” in Asia and the United States.

The company said its acquisition of the Italian luxury jewelry house Bulgari was a key highlight of the quarter.


Jewelry and watches weren’t the only quality performers for the period. Overall, the world's leading luxury goods group reported that first quarter 2011 sales increased 17 percent to 5.24 billion euros ($7.38 billion). All of its business divisions recorded strong growth for the period. The United States, Europe and Asia all recorded positive sales increases.

The Paris-based company said that following the earthquake in Japan, an important market, local teams worked hard to bring a gradual return to normal business.

The Wines & Spirits business group posted a 20 percent increase in sales to 762 million euros ($1.08 billion) boosted by strong demand in the U.S. and Asia.

The Fashion & Leather Goods business, home to the company's most prestigious brand, Louis Vuitton, reported a 17 percent sales increase to 20.3 billion euros ($28.85 billion).

Perfumes & Cosmetics sales increased 9 percent to 803 million euros ($1.14 billion) led by traditional and new products from Christian Dior and Guerlain.

The Selective Retailing business segment sales grew 20 percent for the quarter to 1.4 billion euros ($2.02 billion) due to a rise of tourism in Asia. Sephora chain of cosmetic stores continued to do well across regions, increasing its market share.

LVMH said it will continue to focus its efforts on developing its brands and maintaining control over costs. It said it will rely on “the diversification of its businesses and the good geographical balance of its revenues to increase.”

Bulgari Sales Up 20%, Jewelry Sales Up 28%

Bulgari Group said Wednesday that fourth quarter 2010 sales increased 20.5 percent at current exchange rates to 357.8 million euro ($491.3 million) at current exchange rates (Sales increased 11.4% at comparable rates).

“The fourth quarter results certify a definitive recovery in all geographical areas and product categories,” the Italian luxury jewelry house said in a statement. “An excellent performance by jewelry was thus accompanied by highly positive accessory and perfume sales results, whilst with regard to watches the Serpenti, Bulgari Roth and Bulgari Genta collections, launched during the quarter, had an excellent start.”

Strong sales gains were reported in all regions, with the strongest growth in Asia.

By product category, jewelry sales grew by 28.3 percent to 166.7 million euro ($229 million) for the period, the company said. Excluding the significant but volatile contribution of the high jewelry segment, the category increased by 36 percent
.
Watch sales grew by 7 percent for the period to 73.5 million euro ($101 million), after three weak quarters. Its accessories business posted a 31.4 percent uptick and perfumes also did very well, with a 14.1 percent rise.

By region, the fourth quarter saw U.S. increase by 10.3 percent. Sales in Europe rose 8.4 percent and Middle East rose by 13.9 percent.

The company noted the “spectacular” sales gain in Asia at 37.7 percent, including the “progressively improved” performance in Japan, up 24.9 percent. Sales were up 47.3 percent in greater China. The remaining areas of Asia grew by 48 percent.

“These sales results are highly satisfactory overall, and represent a record fourth-quarter turnover in the history of the company, thus confirming the recovery we had already noted in the previous quarters, said Francesco Trapani, Bulgari Group CEO. “The performance of watches, in particular, demonstrates that with the expansion and the upgrading in our offer we are going in the right direction. In the core business of jewelry, the innovation and design of the Bulgari brand have achieved excellent performance levels both in the basic and high-end segments, in spite of the challenging comparison bases. Lastly, perfumes and accessories prove once again that the diversification strategy aimed at competing at the highest levels in the market is winning. In conclusion, these data are definitely a good starting point for the months to come, and induce me to a cautious optimism.”

Zale Corp. Profit Lauded as a ‘Turning Point’ for the Company

Zale Corp. said Wednesday that its year-over-year net income in the fiscal second quarter rose 400 percent to 27.2 million, compared with $6.7 million for the second quarter of the prior fiscal year.

Revenues for the quarter ended January 31, increased 7.6 percent to $626 million, the Dallas-based jewelry and diamond retailer. Same store sales for the period increased 7.9 percent, compared to a decrease of 11.2 percent during the comparable period in the prior year. At constant exchange rates, which exclude the effect of translating Canadian currency denominated sales into U.S. dollars, same store sales increased 7 percent for the quarter.

The company achieved gross margin on sales of 50.3 percent for the quarter, compared to 49.8 percent in the comparable quarter last year.

“Our financial performance for the critical second quarter reflects the collaborative efforts of our total organization focusing on one objective – delivering a successful holiday,” said Theo Killion, Zale Corp. CEO. “In doing so, we’ve taken an important step towards our goal of returning to profitability.”

“This quarter marked a turning point for the company as we returned to positive same store sales,” added Matt Appel, Zale Corp. CFO. “We are pleased with the results to date from our turnaround initiatives.”

Selling, general and administrative expenses were $258 million, or 41.2 percent of revenues, in the quarter, compared to $252 million, or 43.3 percent of revenues, in the same period last year. Its operating income for the quarter was $44 million compared to an operating loss of $3 million in the prior year quarter. Operating margin improved $46 million, or 750 basis points, to 7 percebt for the, compared to negative 0.5 period in the same period last year.

The company incurred income tax expense of $6 million for the period, compared to a benefit of $12 million in the comparable period in the prior year.

Inventory as of January 31, stood at $777 million, an increase of approximately $39 million from Jan. 31, 2010, in anticipation of the Valentine’s Day selling period. As of January 31, the company had outstanding debt of $385 million, compared to $368 million as of January 31, 2010.

Zale Corp. is a leading specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,870 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corp.'s brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda.

PPR Sales Up 7.5%, Management Shakeup Announced

François-Henri Pinault

PPR, the world’s third largest luxury group, reported a 7.5 percent increase in revenue to 14.6 billion euros ($20 billion) for 2010. On a comparable basis, when currency fluctuations and other factors are removed, revenue increased 4 percent.

Net earnings income for the Paris-based company totaled 965 million euros ($1.31 billion) versus 950 million euros ($1.29 billion) last year. Operating income rose 23.5 percent to 1.53 billion euros ($2.1 billion).

“The operating and financial performance of the Group as a whole and of each of its businesses was outstanding in 2010. Cost-control efforts launched during the height of the economic crisis and the sales offensive implemented successfully in 2010 to drive profitable revenue growth enabled the Group to take full advantage of the upturn,” said François-Henri Pinault, PPR chairman and CEO. “I am confident … PPR will continue to achieve robust revenue growth in 2011 and deliver a better financial performance than in 2010.”

The company—whose luxury brands include Boucheron, Gucci, Bottega Veneta, Yves Saint Laurent and Balenciaga—also announced a shakeup of its management structure. Under the plan, which becomes effective March 1, Pinault will head the company’s luxury division. He will replace Robert Polet, who led the division since 2004. The company also has a Sports & Lifestyle division, which includes the brands Puma, Fnac and Redcats.

Under the new structure, each luxury brands will retain its autonomy under the responsibility of its respective CEO and creative director. The Luxury Business group will report directly to Pinault. Alexis Babeau, who was previously COO of Gucci Group, has been appointed deputy CEO of the Luxury Business group.

Pinault, in a statement, said the new management structure was “conceived jointly” with Polet.

“I would like to give Robert the warmest thank for his commitment and dedication in leading Gucci Group to where it is now,” Pinault said. “His many qualities and achievements have earned him the respect of all in the world of Luxury. Today, our Luxury Business Group has blossomed into an ensemble of superb, creative and independent brands achieving outstanding operational and financial performances.”