Q4 Earnings at Tiffany & Co. Edge Past Expectations

Andrew Klips  |

Tiffany & Co. (TIF) on Thursday reported fourth-quarter earnings that nipped past analyst predictions, although sales at the luxury jewelry maker were just shy of expectations, as sales in Japan decreased and the Americas region only advanced modestly. The company also warned of a sharp decrease in earnings for the current quarter, but guided that gains in following quarters will make up for it.

For the quarter ended January 31, 2013, New York City-based Tiffany reported total sales of $1.24 billion, up 4 percent from $1.19 billion in the year prior quarter. Net earnings for the quarter were $179.64 million, or $1.40 per diluted shares, up a bit from $178.4 million, or $1.39 per diluted share, in the same quarter last year.

Wall Street was expecting EPS of $1.36 on revenue of $1.25 billion.

During Q4, sales in Japan declined 6 percent to $192 million, reflecting a weaker yen versus the US dollar. For all of 2012, though, sales increased 4 percent to $639 million, or 17 percent of Tiffany’s total sales. In the Americas region, sales grew 2 percent for the fourth quarter and for the full year to $620 million and $1.8 billion, respectively.

On a constant-exchange basis, same-store-sales in the Americas declined 2 percent on the quarter and full year.

The Asia-Pacific region experienced steady growth with eight new stores added in 2012 helping to increase sales by 13 percent to $254 million in the fourth quarter and 8 percent to $810 million for the full year.

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Total revenue for all of 2012 increased 4 percent from 2011 to $3.8 billion. Net earnings for the year totaled $416 million, or $3.25 per share, down from $439 million, or $3.40 per share, in 2011. 2011 also included a one-time charge of 20 cents per share related to relocation costs of moving the corporate headquarters. Excluding that charge, net earnings were 10 percent lower year-over-year.

“While financial results in fiscal 2012 were disappointing due to lower-than-expected sales growth and pressures on gross margin, we continued to maintain a longer-term focus on strengthening global awareness of the TIFFANY & CO. brand and on further developing compelling product offerings,” said Michael J. Kowalski, chairman and chief executive officer at Tiffany, in today’s statement.

Looking ahead, Tiffany sees net sales growth of 6 percent to 8 percent for 2013. The company guided 2013 EPS in the range of $3.43 to $3.53

The luxury retailer said it expects global net sales to increase 6% to 8% in 2013 and net earnings from operations to rise 6% to 9% to $3.43 to $3.53 per diluted share. A 6 percent increase in sales was inline with Wall Street predictions of $4.04 billion, as was the EPS outlook, with analysts expecting $3.50 per share in profits.

The company warned that net earnings are expected to drop by 15 percent to 20 percent in the first quarter because of “gross margin pressure and higher marketing-related costs,” with growth following in subsequent quarters.

Shares of TIF closed trading Thursday at $67.91, down 2.41 percent on the day. Across the past year, shares are down about 4 percent, although they are up almost 40 percent from lows of $48.98 late last June. Shares are coming out of the gate strong in early Friday action, jumping 3 percent to around $70.

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