Nov 26, 2013
Tiffany raises profit outlook as Asia fuels quarterly sales
Nov 26, 2013
Tiffany & Co on Tuesday reported a higher quarterly profit after far stronger-than-expected sales in Asia mitigated continued softness in the United States, and the jeweler again raised its full-year earnings forecast.
The retailer's shares rose 6.4 percent to $86.15 in trading before the market opened.
Global sales rose 7 percent to $911.5 million in the third quarter ended October 31, well above the $889.5 million that analysts were expecting, according to Thomson Reuters I/B/E/S. Comparable sales, which include those at stores open at least a year and from e-commerce, rose 7 percent.
The increase was most pronounced in Asia, excluding Japan. Comparable sales in the region, where Tiffany now gets almost one-quarter of sales and is expanding most aggressively, rose 22 percent, well above analysts' expectations.
But in other regions, Tiffany's business grew more modestly.
In the Americas, comparable sales rose 1 percent, roughly in line with estimates. The jeweler attributed the increase to strong sales at its famed Fifth Avenue flagship in New York, suggesting its other U.S. stores did not fare as well.
The company has struggled in the United States, its biggest market, to find the right mix of the expensive jewelry for which it is known and the more-affordable silver items, typically less than $500, that generate 25 percent of sales and comprise its most profitable category.
Tiffany introduced some new silver jewelry lines this year and hired a new design director in September to improve its fashion collections.
"It doesn't seem like it's resonating yet with shoppers - you need to U.S. sales get going," said Edward Jones analyst Brian Yarbrough.
A poll of 795 Americans that Ipsos conducted for Reuters earlier this month found 39 percent of shoppers plan to spend less on jewelry this holiday season, while only 3 percent intend to spend more.
Still, analysts expect Tiffany's U.S. comparable sales to rise at a faster rate - 2.5 percent - during the current holiday quarter.
Signet Jewelers Ltd, which operates the Kay Jewelers and Jared chains, said its U.S. same-store sales had risen 4.2 percent in the latest quarter. Zale Corp, a mid-tier U.S. specialty jeweler, will report results Tuesday afternoon.
In Europe, Tiffany's comparable sales increased 2 percent, while in Japan they rose 5 percent, stripping out the effect of foreign exchange.
Tiffany reported net income of $94.6 million, or 73 cents per share, compared with $63.2 million, or 49 cents per share, a year earlier.
Analysts were expecting 58 cents per share.
The company benefited from lower diamond, gold and silver costs.
Tiffany raised its full-year profit forecast by 15 cents per share to a range of $3.65 to $3.75. It still expects net sales worldwide to increase by a mid-single-digit percentage rate for the fiscal year.
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