* Tiffany holiday same-store sales flat worldwide
* Tiffany sees FY '13 net income at low end of own forecast
* Zale U.S. fine jewelry same-store sales up 2.2 percent
* Tiffany shares down 4 pct, Zale up more than 9 pct
(Adds analyst comment, updates stock prices)
By Phil Wahba
Jan 10 Tiffany & Co posted holiday sales
that showed its torrid growth of recent years was sputtering in
the United States, Japan and Europe, with China the only bright
spot for the upscale jeweler.
The company, famed for its blue boxes and its Fifth Avenue
flagship in Manhattan, said on Thursday that worldwide sales at
stores open at least year were flat in November and December, a
period that can account for one-third of jewelers' annual sales
and almost half of profit.
Separately, Tiffany's lower-end peer, Zale Corp
continued to show an improvement, but at a slower pace. U.S.
holiday same-store sales at its Zales and Gordon's stores rose
2.2 percent, well below the year-earlier 9 percent increase.
Tiffany gave a modest profit forecast for the coming fiscal
year and Chief Executive Officer Michael Kowalski said Tiffany
was planning "conservatively" for next year's sales growth
because of "uncertainty" about the economy in all of its major
Concerns about the state of the economy and the "fiscal
cliff" debate, which raised the specter of automatic tax
increases on Jan. 1, weighed on shoppers in December, hurting
overall holiday retail sales in United States.
But a looming debt-ceiling debate that could revisit
government spending and tax levels could again curb shoppers'
appetite for jewelry just before the next important season for
"Valentine Day's going to be a period where we going to be
watching what we're spending," IBISWorld senior retail analyst
Nikoleta Panteva said. Jewelry is far from essential and it
takes little to see shoppers pull back, she added.
Tiffany's net worldwide sales during the holiday season rose
4 percent, helped primarily by gains in China. Elsewhere, the
numbers were lackluster, even falling 2 percent at Tiffany's
Fifth Avenue flagship.
In Europe, sales at stores open at least a year were flat,
while in Japan, Tiffany's second-biggest market, they rose 1
percent, excluding the impact of currency fluctuations. In Asia,
same-store sales were up 7 percent.
Because of the sluggish holiday sales, the company expects
earnings to come in at the lower end of its earlier forecast of
$3.20 to $3.40 per share for the fiscal year ending Jan. 31.
Tiffany shares were down 3.9 percent at $60.81 on Thursday
afternoon on the New York Stock Exchange. They had risen 3.4
percent in the two days since Kay Jewelers and Jared parent
Signet Jewelers Ltd, the largest U.S. jeweler, raised
expectations about Tiffany's performance by reporting
stronger-than-anticipated holiday numbers.
A difficult economy prompted Tiffany to scale back its sales
and profit forecasts three times this fiscal year.
Earlier in the year, Tiffany, which is best known for its
pricey diamond necklaces and rings, blamed weak demand for its
less expensive silver jewelry, which accounts for a quarter of
Citi analyst Oliver Chen said in a note that Tiffany needed
to improve its selection of lower-priced jewelry "to regain a
customer who may not be able to afford the current offering."
Despite Tiffany's challenges, Oppenheimer & Co analyst Brian
Nagel said in a note that he expected the stock to recover over
time because of rising demand for luxury goods.
Tiffany expects net earnings to rise 6 to 9 percent in the
year beginning in February. That means a range of $3.39 to $3.49
per share, Canaccord Genuity analysts said in a note, which
would be well below the $3.78 Wall Street consensus estimate.
Zale's U.S. holiday numbers were weaker than the 4.7 percent
rise in U.S. same-store sales at Signet Jewelers Ltd,
but Zale reiterated that it expects to return to profitability
this fiscal year after several years of losses. Its shares were
up 9.3 percent at $4.58 on Thursday afternoon.
Zale also operates two chains in Canada, where same-store
sales rose 2.7 percent.
(Reporting by Phil Wahba in New York; editing by Lisa Von Ahn,
Grant McCool and Matthew Lewis)