A Gleaming Quarter for Tiffany

Shares gained Wednesday after the luxury jeweler reported a jump in profits and hiked its full-year earnings forecast

Did you ever think for even a second that Tiffany (TIF) shoppers were price sensitive? The jewelry store said Nov. 28 that it earned more money during recent months and upped its forecast for its full fiscal year ending Jan. 31. Even as gold prices soar, people have been buying more jewelry there than some had expected.

The high-end New York-based store, founded more than a hundred years ago, said its net earnings during the quarter ended this Oct. 31 increased 23% to $29.1 million.

Tiffany's earnings per share amounted to 21 cents during the quarter, while the mean analyst estimate had been for 16 cents per share, according to the San Francisco research firm StarMine.

The stock surged 7.2% to $38.51 per share in early trading on the New York Stock Exchange.

"We are pleased with these overall results," said CEO Michael J. Kowalski in a press release.

Tiffany's net sales climbed 10% to $547.8 million during the quarter compared to last year. And Kowalski noted that almost one month into the November-December holiday period, his company's U.S. sales growth at stores open more than a year is exceeding its high-single-digit expectation. International sales are exceeding his company's mid-single digit expectation.

"It's a good start to the season, but the vast majority of holiday business is still ahead of us," Kowalski said.

He thinks net sales will grow around 10% in 2006. With the way sales have been going, Kowalski upped his forecast on full year 2006 net earnings to a range of $1.79 to $1.84 per diluted share. The mean analyst forecast for the year had been for $1.77 per share, according to StarMine.

But Kowalski also warned that his company's profit margins will be "slightly lower" in 2006 than the prior year. Tiffany's expenses have been on the rise, including store and marketing costs. During the third quarter Tiffany's profit as a percentage of sales amounted to 53% compared to 54.1% a year ago.