Tiffany Cuts Outlook, Misses Third-Quarter Expectations
November 24 2015 - 08:20AM
Dow Jones News
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
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 24, 2015 08:05 ET (13:05 GMT)
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