Nov 25, 2009
Tiffany profit beats; view raised ahead of holiday
Nov 25, 2009
By Phil Wahba
NEW YORK (Reuters) - Tiffany & Co (TIF.N) reported a larger-than-expected quarterly profit and raised its forecast for full-year earnings on the strength of its overseas sales and a solid start to the holiday season, sending the upscale jeweler's shares up nearly 6 percent.
The company's sales showed double-digit growth in Asia and a slower rate of decline for the United States.
As with other luxury retailers, Tiffany has struggled during the recession as consumers curtailed spending on nonessential items like jewelry.
Global sales at stores open at least a year, an important retail gauge known as same-store sales, fell 6 percent during the quarter and were down 10 percent in the United States.
The declines eased as the quarter progressed, Tiffany said, and November worldwide is signaling a strong start for the holiday season.
"We were pleased to see that the rate of sales declines in the U.S. lessened as the year progressed," said Chief Executive Officer Michael Kowalski. "At the same time, many countries in Asia-Pacific and Europe achieved considerably better-than-expected sales."
At Tiffany's flagship story on Manhattan's Fifth Avenue, sales shrank 8 percent during the quarter.
Tiffany's results came the day after rival jeweler Zale Corp (ZLC.N) reported smaller losses than expected and a week after upscale U.S. department store Saks Inc (SKS.N) posted a surprise profit, suggesting the pressure on luxury retailers could be easing.
Tiffany raised its outlook for full-year profit from continuing operations to between $1.88 and $1.98 per share. It previously had expected $1.65 to $1.75.
Earnings edged down to $43.3 million, or 35 cents per share, in the third quarter ended on October 31 from $43.8 million, or 35 cents per share, a year earlier.
Excluding one-time items, such as a charge from a diamond sourcing agreement and a tax benefit, Tiffany reported a profit of 33 cents per share from operations.
On that basis, analysts on average had forecast earnings of 24 cents a share, according to Thomson Reuters I/B/E/S.
Sales fell 3 percent to $598.2 million from $616.2 million. Analysts had forecast $575.1 million.
In the Americas, overall sales fell 9 percent to $303.5 million, but in Asia, they rose 10 percent to $225.8 million, helping mitigate some of the decline.
Most retailers have reined in inventory levels to try to avoid steep discounts on extra merchandise. Tiffany's inventories were down 6 percent from year-earlier levels.
The company operates 215 Tiffany & Co stores and boutiques globally.
In trading before the market opened, Tiffany shares were up 5.8 percent at $44.25.
(Reporting by Phil Wahba; Editing by Lisa Von Ahn)
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