Tiffany forecasts consistent 2007 direct market sales

Tiffany & Co., which generates more than 60% of its direct sales online, is expecting to grow its direct market business in the “mid teens” for 2007, the jewelry retailer says in its recently filed quarterly earnings report.

In the first quarter, Tiffany, No. 98 in the Internet Retailer Top 500 Guide, posted direct marketing sales of $33.3 million, an increase of 11% from Q1 2006 direct sales of $29.9 million. Also in Q1 Tiffany posted net earnings of $49.6 million on sales of $620.8 million vs. net earnings of $43.1 million on sales of $539.2 million in Q1 2006.

“Direct marketing sales rose 11% in the first quarter due to growth both in the number of orders shipped and in the average order size,” Tiffany says in its Q1 financial filing. “Management currently expects a mid-teens percentage increase in full year direct marketing sales.”

The online sale of luxury goods such as jewelry has been strong for several years. But the fact that Tiffany is only expecting its U.S. stores sales to grow in the high single digits and its direct market business by between 13% and 17% in 2007 has some analysts wondering if the luxury goods retail market, especially online, is softening. “Online luxury sales have had a good run and the estimate by Tiffany is probably conservative,” says Jim Okamura, senior analyst at J.C. Williams Group. “It makes me wonder if their estimate is a harbinger of softer sales ahead.”