* 3rd-qtr EPS 49 cts vs 63 cts view
* Sees annual net sales up 5 pct-6 pct, vs prior view up 6
* Stock falls 6.2 pct in afternoon trading
By Phil Wahba
Nov 29 Tiffany & Co lowered its
fiscal-year sales and profit forecast for the third straight
quarter after weak quarterly sales of its high-margin but
inexpensive silver jewelry and a drop in quarterly same-store
sales in its key Asia market.
Shares slid 6.2 percent in afternoon trading on Thursday.
In the Americas, still its largest market by a wide margin,
Tiffany sold fewer items, with the drop entirely attributable to
silver jewelry costing less than $500, its most profitable
merchandise. The slide suggests less affluent shoppers are
pulling back, even as sales of its more expensive items rose.
"People are waiting more for key periods like the holiday
season to spend money on gifts," Morningstar analyst Paul
The high-end retailer gets about one-quarter of its sales
from its less expensive jewelry.
U.S. same-store sales at lower-end rivals like Zale Corp
and Signet Jewelers also slowed during the
quarter, compared to a year earlier.
The rest of the holiday season might not be any better for
jewelry sellers. According to a Reuters/Ipsos poll last weekend,
41 percent of consumers said they plan to spend less on jewelry
this year than last year, while only 5 percent expect to spend
more. Thirty-five percent expect to spend the same amount.
STILL CONFIDENT ABOUT CHINA
Tiffany, famed for its blue boxes, has banked heavily on new
fast-growing markets, particularly Asia outside Japan. But the
region, where it now gets nearly one-quarter of its business,
has been affected by the economic slowdown in China.
Sales at Asian stores open at least a year fell 4 percent,
excluding currency effects, with weakness most acute in Hong
Kong. In the year-ago quarter, same-store sales in Asia rose 36
But the company said it was confident that things in China,
viewed by experts as the motor for luxury's growth, would pick
"We remain confident that China will experience significant
economic growth in the years ahead and that the Chinese will
continue to increase in importance as customers of Tiffany and
other luxury goods purveyors," Mark Aaron, vice president of
investor relations, said on a conference call.
The New York-based jeweler now expects global net sales to
rise between 5 percent and 6 percent for the year ending in
January, down one percentage point from its most recent
forecast, which followed earlier downward revisions.
That implies that total holiday quarter sales, which
generate about a third of annual revenue, should rise by a
m i d-to-high single-digit percentage, the company said.
'CAUTIOUS' GLOBAL OUTLOOK
Tiffany has a "cautious" near-term view of the global
economy, but expects results to start improving during the
current holiday season, Chief Executive Michael Kowalski said in
It projected full-year profit of $3.20 to $3.40 per share,
down from an earlier range of $3.55 to $3.70. Wall Street
targeted $3.60 per share.
Global sales rose 3.8 percent to $852.7 million in the third
quarter that ended Oct. 31, while sales at stores open at least
a year across the chain rose 1 percent. Analysts expected sales
of $859.2 million, according to Thomson Reuters I/B/E/S.
Net income fell to $63.2 million, or 49 cents per share, for
the quarter, from $89.7 million, or 70 cents, a year earlier.
The latest result was 14 cents below Wall Street's projections.
Earlier this year, consulting firm Bain & Co forecast that
global luxury sales growth would slow. Last week, the head of
French luxury group LVMH watches and jewelry division
said luxury brands still faced challenges in China.
The slowdown comes as Tiffany plans to open eight new stores
in the region.
In the Americas, sales rose 3 percent, largely because of
improving business at its Fifth Avenue flagship store, where
sales were up 5 percent.
Europe, with the exception of Britain, also showed
improvement. Same-store sales rose 8 percent in constant
currency terms. In Japan, Tiffany's second-largest market, sales
rose 3 percent.
Tiffany's stock fell $3.93 to $59.80 in afternoon trading.