Operator: Good day, everyone, and welcome to this Tiffany & Company First Quarter Conference Call. Today's call is being recorded.
Participating on today's call are Mr. Pat McGuiness, Tiffany's Senior Vice President and Chief Financial Officer and Mr. Mark Aaron, Vice President of Investor Relations. At this time, I'd like to turn the call over to Mr. Aaron. Please go ahead, Sir.
Mark L. Aaron - VP, IR: Thank you. Thank you everyone for joining us on today's conference call. Pat and I will review first quarter results and also update you on our full year plans and outlook.
Before continuing, please note Tiffany's Safe Harbor provision that statements made on this call that are not historical facts are forward-looking statements. Actual results might differ materially from the expectations projected in those forward-looking statements.
Additional information concerning risk factors that could cause actual results to differ materially is set forth in Tiffany's Form 10-K, 10-Q and 8-K reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.
Now we can proceed with the review of Tiffany's performance. It's safe to say that we are pleased to begin the year with better than expected sales and earnings. Sales growth of 9% in dollars or 13% on a constant exchange rate basis was driven by solid performance in Japan, Asia Pacific and Europe, but sales in the Americas were somewhat softer than we expected.
Gross margin, although below last year due to product sales mix continue to benefit from diminishing product cost pressures as well as price increases that we implemented during the quarter, across all regions in product category.
SG&A expense growth was well contained in the quarter and net earnings were up 3% on a GAAP basis. However, if you exclude expenses in the quarter tied to cost reduction initiatives, a 10% increase in net earnings was quite a bit better than our initial expectation for decline of 15% to 20%. Please refer to our non-GAAP measures scheduled in today's news release.
We're encouraged with the start of the year, but caution you to not draw overly optimistic conclusions from the first quarter, which generates relatively small percentage of sales and earnings in comparison with annual results.
I'll now review sales by region. In our largest region, the Americas, total sales rose 6% in the quarter to $408 million, which was below our expectation. In fact, the 6% sales growth was entirely due to an increase in average price, while unit growth in higher-priced statement and fine jewelry was offset by unit declines at more moderate price point categories.
On a constant exchange rate basis, total sales also rose 6% and comparable store sales rose 3%. Sales growth in the New York flagship store was higher than the region's increase, as it particularly benefited from large purchases tied to our Blue Book event in April, as well as from foreign tourism, which represents almost half of that store's sales.