Tiffany Up; J.C. Penney Down

August 17, 2000

Tiffany Up; J.C. Penney Down

Luxury goods retailer Tiffany & Co. Inc. announced Wednesday a 70% increase in second-quarter earnings, driven by strong sales growth in the U.S. and Japan. Second-quarter sales for Tiffany rose 21% to $371.98 million, up from $307.07 million in the same quarter last year. Net income for the second quarter jumped to $39.17 million from $22.98 million in the second quarter last year. Catalog sales and Internet sales were up by 19% to $31 million.

"Our very successful performance reflects an increasing awareness among customers who appreciate Tiffany's range of extraordinary product offerings," said Michael Kowalski, president and CEO. "Tiffany has a strong base upon which we can pursue additional growth opportunities in the U.S. and internationally in the years ahead."

The total U.S. retail sales for Tiffany increased 18% to $187.9 million for the quarter, thanks to strong performance at the company's four new stores. Tiffany also saw a 19% increase in sales at U.S. stores open for at least a year. International sales were up 26% to $153.3 million, driven in part by sales in Japan where same-store sales were up 12%.

In contrast, J.C. Penney Co. Inc., the fifth largest retailer in the U.S., reported a decline in net income to $23 million for the quarter ending July 29, 2000, compared with $39 million in the same quarter last year. Operating profits for the second quarter fell to $74 million from $118 million last year due to slow department store sales. Department store sales in stores open at least one year declined 1.5%.

Gross margin for the department stores and catalog segment declined primarily as a result of lower sales volumes in stores and higher levels of markdowns than last year, the company said. As a percent of sales, gross margin declined by 90 basis points compared with last year's second quarter.

Direct marketing sales faired better than department store sales with a 6.5% increase to $66 million, up from $62 million in last year's second quarter. Revenue for the period was up 6.2% to $293 million, and catalog sales for the period increased 1.5%. Internet sales, which are included as a component of catalog sales, continue to be strong and totaled $47 million compared with $10 million in last year's second quarter.

- by Julia M. Duncan