Tiffany trims outlook as same-store sales fall
NEW YORK (Reuters) - Tiffany & Co (TIF.N) issued a disappointing profit forecast on Friday and reported lower U.S. same-store sales over the holidays, signaling that shaky consumer spending is taking a toll on the luxury sector.
The jewelry retailer, whose shares tumbled 12 percent, said it was analyzing sales and earnings expectations for the fiscal year beginning next month, given lackluster demand at its U.S. stores and consumer wariness.
"We believe a recent pullback in U.S. spending likely reflected a more cautious attitude among customers about the near-term direction of the economy and related factors," Chief Executive Michael Kowalski said in a statement.
Goldman Sachs analyst Adrianne Shapira wrote in a note to clients that Tiffany shares would likely remain under pressure until the company issued an achievable earnings outlook for the new year.
Tiffany cut the top end of profit estimate for the fiscal year ending this month, indicating fourth-quarter results will be less than spectacular. It now expects earnings of $2.25 to $2.28 per share excluding certain items. In November it forecast $2.25 to $2.30.
The estimate excludes a gain from the sale of its Tokyo flagship store and charges for a contribution to the Tiffany & Co foundation and a recent deal with Swatch Group (UHRN.S) (UHR.VX) to make Tiffany-branded watches.
Tiffany cut its full-year sales growth forecast to 14 percent from 15 percent.
For the fourth quarter, it forecast a profit of $1.19 to $1.22 per share excluding the Swatch charge, and sales growth of 8 percent.
The company said it did not see any change in sales trends in January, which can make up 15 percent to 20 percent of quarterly revenue.
TOURIST BOOST
Tourists, mostly from Europe and China, boosted sales at its U.S. stores in the November-December holiday period, Tiffany said.
At its flagship store on Manhattan's Fifth Avenue, sales rose 10 percent thanks to foreign visitors. U.S. consumers spent a little less there than last year.
Though the weakness in U.S. consumer spending was not surprising, its magnitude was greater than expected, Tiffany said.
Sales at U.S. stores open at least a year fell 2 percent, while international same-store sales rose 5 percent on a constant-currency basis.
U.S. retail sales in the holiday season increased 4 percent to $449.1 million. Fewer people made purchases, but those who bought spent more, the company said. Continued...
