Maybe the wealthy are recession-proof, or at least sluggish recovery-proof. First quarter earnings for fiscal 2011 at global jeweler Tiffany & Co. (TIF) bear that out. Worldwide net sales at the high-end retailer increased 20 percent to $761.0 million during the first quarter ending April 30. Tiffany’s net earnings shot up by 26 percent to $81.1 million, even as production costs rose.
Sales in the company's main geographic segments saw double-digit growth, including a 19 percent gain in the Americas, a 37 percent increase in the Asia-Pacific region and a 25 percent rise in Europe. In Japan, where a devastating earthquake and tsunamis rocked the country during the quarter, sales nevertheless rose by 7 percent.
"We are pleased with the very strong start to the year. We achieved healthy sales growth in most regions," says company CEO Michael J. Kowalski. "We have exciting plans this year. We will open 19 new stores, introduce a broad range of compelling new products and will increase our spending on marketing communications."
The company adds that it expects sales to exceed previous expectations for this year. So do analysts. Zacks Investment Research upgraded the company's stock to outperform from neutral.
"Better-than-expected first-quarter 2011 results buoyed by improved demand for luxury items worldwide, increased outlook, and much better performance at Japan than expected inspired us to revise our recommendation," the research and ratings firm says.
Others say be cautious on Tiffany shares. Deutsche Bank recently downgraded the stock to hold from buy on the sentiment that since first-quarter sales were so strong, most in the market already have awoken to the stock's attractiveness.
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