Tiffany ResultsTiffany shares dive with 26% drop in profit
By Dan Burrows, CBS MarketWatch.com
NEW YORK (CBS.MW) -- Tiffany & Co. shares sank in early trading Thursday after the high-end jeweler reported an unexpected 26 percent decline in third-quarter earnings owing to continuing weak sales in Japan and higher costs for precious metals and
The results led New York-based Tiffany (TIF: news, chart, profile) to scale back its full-year forecast. Shares were trading at $29.95, down 6.7 percent, or $2.16.
Income tumbled to $20.8 million, or 14 cents a share, compared with last year's $28 million, or 19 cents a share. The results were well below the 19 cents a share average estimate gleaned by analysts reporting to Thomson First Call.
Tiffany's sales for the latest quarter improved 7.2 percent to $461.2 million from $430.1 million last year. However, this also fell short of the average estimate of $465.2 million.
"These disappointing results do not affect our long-term strategic direction," said Chairman Michael Kowalski in a statement. "While the U.S. sales increase was geographically broad-based, we had to cope with softer demand in the early part of the quarter and faced a tough comparison with 2003's third quarter.
"In Japan, we are continuing to reposition our product assortment and support new product introductions with additional marketing and the opening of two freestanding stores," he said.
U.S. retail sales advanced 7 percent to $216.5 million, with same-store sales, or sales for stores open at least a year, increasing by 4 percent. Sales in Japan, however, declined 2 percent overall and suffered a 5 percent drop in same-store sales at constant exchange rates.
To reflect the shortfall, Tiffany said it now projects full-year earnings of $1.43 to $1.48 a share, lower than its previous forecast of $1.55 to $1.60 a share. The First Call-derived average estimate stood at $1.54 a share.