Tiffany & Co (TIF.N) raised its full-year profit forecast after the jewelry chain reported better-than-expected quarterly results as new collections drove sales in the United States, its biggest market.
Shares of Tiffany, known for its blue boxes and its Fifth Avenue flagship store in Manhattan, rose as much as 10 percent on Wednesday morning, making the stock one of the top percentage gainers on the New York Stock Exchange.
Tiffany has been struggling for the past two years to find the right balance between the pricey jewelry for which it is known and cheaper silver items that generate a quarter of sales.
Edward Jones analyst Brian Yarbrough said Tiffany's U.S. business had lagged other regions for several quarters, mainly as it was weak in lower-priced silver jewelry category.
"Strength in fine and statement jewelry sales continued, while sales of our new or expanded jewelry collections accelerated, led by our ATLAS collection," Chief Executive Michael Kowalski said in a statement.
Tiffany's fine jewelry is priced a few thousand dollars, while statement jewelry pieces can go as high as $50,000 and above.
The Atlas Collection is a new range that focuses on silver jewelry - including lariats, rings and pendants - priced below $500. Tiffany's profit margin in these pieces is higher than in expensive jewelry.
The company's Fifth Avenue store, which accounts for 8 percent of its overall sales, has benefited as more tourists visit the marquee store and spend more on jewelry.
International visitors to the United States spent $15.4 billion in March, according to the U.S. Department of Commerce.
Yarbrough said Tiffany was now seeing broad-based strength in the country, whereas growth earlier was led by its Fifth Avenue store.
"They're gaining acceptance outside of just tourists," he said.
Tiffany, which is usually cautious in its outlook, said earnings would be flat in the current quarter.
The company raised its earnings forecast for the year ending January 31 to $4.15-$4.25 per share from $4.05-$4.15 per share.
Comparable-store sales in the Americas, which account for nearly half of Tiffany's overall sales, rose 8 percent excluding currency fluctuations in the first quarter ended April 30.
Net profit rose 50 percent to $125.6 million, or 97 cents per share, while total sales rose 15 percent to $1 billion on a constant-currency basis.
Analysts on average had expected a profit of 78 cents per share on sales of $956.3 million, according to Thomson Reuters I/B/E/S.
Company-wide sales at stores open at least a year rose 11 percent on a constant-currency basis in the first quarter.
Tiffany's shares were up 9.8 percent at $96.88 in late morning trading on Wednesday.
(Editing by Kirti Pandey)