Bloomberg News

Tiffany Jumps After Store Sales Drop Less Than Estimated

August 27, 2012

Tiffany & Co. (TIF:US), the world’s second- largest luxury jewelry retailer, jumped the most in a year after reporting a drop in worldwide comparable-store sales that was smaller than some analysts projected.

Tiffany advanced (TIF:US) 7.2 percent to $62.71 at the close in New York, for the biggest gain since Aug. 26, 2011. The shares (TIF:US) have declined 5.4 percent this year.

Sales at stores open at least a year dropped 1 percent, excluding the effect of currency exchange-rate fluctuations, the New York-based company said in a statement today. David Schick, an analyst with Stifel Financial Corp., estimated a 3 percent decline. Comparable-store sales in Europe rose 2 percent, while Schick projected a 5 percent drop.

“There were some fears among investors that the worldwide comparable sales number could be a lot worse,” Schick, who’s based in Baltimore, said in a telephone interview today. “The numbers have shown some resilience in the brand.”

Schick recommends holding the shares.

Tiffany’s comparable-store sales decline was “not as bad as feared,” Brian Nagel, an analyst at Oppenheimer & Co. in New York, wrote today in a note. He rates the shares outperform, the equivalent of a buy.

Sluggish economic growth, the struggling housing market and persistent joblessness have hampered some American consumers’ purchasing power.

Forecast Reductions

Economic uncertainty prompted Tiffany to cut its annual profit and sales forecasts today for a second time this year. Sales have been curbed by weaker spending by Americans in their home market, with demand fluctuating at all price points, and by restraint among European tourists in New York, Mark Aaron, a company spokesman said on a conference call today.

Global net sales will increase as much as 7 percent this year, down from a previous forecast of a maximum of 8 percent, and an original projection of 10 percent, Tiffany said.

Tiffany said profit excluding some items in the year ending Jan. 31 will be $3.55 to $3.70 a share, down from a May forecast of $3.70 to $3.80 a share. Analysts projected $3.64, the average of 24 estimates compiled by Bloomberg. In March, Tiffany forecast profit of as much as $4.05.

Profit Gains

Net income in the three months ended July 31 increased 2 percent to $91.8 million, or 72 cents a share, from $90 million, or 69 cents, a year earlier. Analysts projected 73 cents, the average of 21 estimates (TIF:US) compiled by Bloomberg.

Revenue in the second quarter rose 1.6 percent to $886.6 million. The average of 19 analysts’ estimates was $890.1 million.

Sales at stores open at least a year retreated 5 percent in the Americas, including a 9 percent drop at the jeweler’s main store on Fifth Avenue.

Tiffany’s flagship store accounts for 8 percent of worldwide sales, and a little more than 40 percent of that comes from foreign tourists, Aaron said at an investor conference in April.

Tiffany also said in a regulatory filing today that it was discussing with Elsa Peretti a phased wind-down of sales of the designer’s products as an alternative to buying her trademarks. Peretti, 72, wants to end her agreement with Tiffany, which produces 10 percent of the jewelry retailer’s sales, the company first disclosed in May. A phased wind-down would mitigate the impact on the company, according to the filing.

Cie. Financiere Richemont SA (CFR) is the world’s largest luxury jewelry maker.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net


Later, Baby
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • TIF
    (Tiffany & Co)
    • $88.04 USD
    • 0.14
    • 0.16%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus