Jewelry retailer Tiffany & Co. said Tuesday that its sales growth weakened in the U.S. and Europe during the holiday season, raising fears that the wealthy may be beginning to rein in spending.
The company known for its iconic turquoise box cut its yearly earnings guidance. Its shares fell more than 7 percent in premarket trading.
The affluent have picked up spending since the Great Recession ended in mid-2009, recovering faster than other segments. Tiffany's results have reflected this, and quarterly results have beat expectations for the past five quarters. But analysts have wondered if this is sustainable, and Tiffany's holiday sales indicate that it may not be.
"After achieving very strong and better-than-expected sales and earnings growth in the first three quarters of 2011, sales weakened markedly in the United States and Europe during the holiday season, reflecting restrained spending by consumers for fine jewelry," said Tiffany CEO Michael Kowalski.
Total sales rose 7 percent to $952 million in November and December, helped by a 19 percent jump in the Asia-Pacific region and a 13 percent rise in Japan.
But in the U.S. growth was slower, with total revenue up 4 percent to $503 million and revenue in stores open at least one year up just 2 percent. The latter measure is considered a key gauge of a retailer's performance.
Higher sales to tourists in the U.S. were offset by weaker spending by U.S. customers, Kowalski said, and sales at its New York flagship store fell 1 percent.
Online and catalog sales were a particularly weak spot, down 4 percent from a year ago.
In Europe, revenue edged up 1 percent to $117 million and revenue in stores open at least one year fell 4 percent
Tiffany now expects earnings for the fiscal year of between $3.60 and $3.65 per share, down in from guidance in November of $3.70 to $3.86 per share. Analysts expected earnings of $3.75 per share, according to FactSet.
Shares fell $5.04, or 7.5 percent, to $61.90 during premarket trading. The stock had been up about 7 percent since the beginning of 2010.