Its boom time for the luxury market. As the economy revives, the high-end products market seems to be on its way to making profits. Don’t believe us? Check the latest statement from a luxury brand, Tiffany and Co. Reportedly, profits at Tiffany & Co more than quadrupled in the three months to January 31 while shares have doubled in the past year. Signaling a period of growth for all luxury jewelers, this growth in sales and shares of Tiffany & Co. is definitely great. On a constant-exchange-rate basis, sales rose 18 percent in the fourth quarter and 16 percent in the year, while like-for-like sales jumped 14 percent and 9 percent. Europe’s sales were the highest for the luxury brand and retailer, rising 29% to $122.9 million in the fourth quarter and 10% to $311.8 million.
The opening of two new stores on the European soil may have contributed to this increase in sales. Profits were also reported for Tiffany from the Far East and the US market, with the New York store reporting a 22 percent rise in sales.
However, despite this rise in sales, profit at the group was below analyst expectations at US$140.4 million, and full-year sales dropped 5 percent. Tiffany reported lower gross margins, dragged down by increased wholesaling of rough diamonds, which generate “minimal if any profit” for the business. There was also an overall rise in Tiffany’s expenses courtesy of management incentive compensations.
But with the gradual and steady growth in sales, Tiffany is sure to overcome all obstacles and show overall profits in 2010.