Tiffany & Co. said earnings this year would fall more than the luxury jeweler had previously anticipated, as adverse exchange rates continue to crimp tourists' spending and diminish repatriated profit.

Shares in Tiffany, down 28% this year, fell 6.3% in premarket trading.

Chief Executive Fré dé ric Cumenal said that in addition to the effects of the stronger dollar, uncertain economic and market conditions in the U.S. and other regions are affecting consumer spending.

The latest retailer to caution ahead of the holiday shopping season, Tiffany said profit is now expected to drop between 5% and 10% from a year earlier, translating to per-share earnings of $3.78 to $3.99, far short of the $4.05 analysts have projected. In August, the company had guided for a 2%-to-5% profit decline.

Like many companies that do significant business abroad, the strong dollar makes Tiffany's products more expensive abroad and diminishes the revenue when it is brought back to the U.S. For Tiffany, the dollar's effect on tourism is a big factor as the company generates nearly a quarter of its U.S. sales—and more than 40% of sales at its flagship Fifth Avenue store in Manhattan—from foreign visitors.

Overall, Tiffany reported a profit of $91 million, or 70 cents a share, up from $38.3 million, or 29 cents, a year earlier. Revenue slipped 2.2% to $938.2 million. Analysts projected 75 cents in earnings per share on $971 million in sales, according to Thomson Reuters.

The company said foreign tourists' spending in the U.S. was sharply lower during the third quarter and pushed sales in the Americas lower by 7%, or 5% lower when currency rates are smoothed out. Sales declined in most of Tiffany's geographic regions except in Japan, where revenue rose 17% from a year earlier, or 34% on an adjusted basis, as that country saw higher tourism. Same-store sales, a carefully watched metric for retailers measuring sales at stores open at least a year, fell 6% world-wide.

Despite the sales declines, Tiffany managed to lift its gross margin to 60.2% from 59.7% a year earlier amid higher prices. The company said in August that it planned to further increase prices to compensate for the strong dollar.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

 

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(END) Dow Jones Newswires

November 24, 2015 08:05 ET (13:05 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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