UPDATE 1-Tiffany quarterly profits off, outlook muted
February 28, 2002 09:06:00 AM ET
(Recasts, adds details, analyst comment)
NEW YORK, Feb 28 (Reuters) - Luxury jeweler Tiffany & Co. (TIF) on Thursday reported a 2 percent drop in fourth-quarter earnings as sluggish economic conditions and slack consumer demand hurt sales growth, and forecast first-quarter earnings around the low end of Wall Street's current estimates.
The New York-based retailer, which last month reported 2001 holiday sales from stores open at least a year off 2 percent, said net income in the quarter ended Jan. 31 was $82.7 million, or 55 cents per diluted share, vs. $84.7 million, or 56 cents per diluted share, in the prior year.
Excluding an impairment charge, earnings would have been $87.2 million, or 58 cents a share, Tiffany said.
Analysts polled by research firm Thomson Financial/First Call had expected Tiffany to report earnings between 54 cents to 56 cents a share, with a mean at 56 cents.
The company's own forecast was for profits at the upper end of its forecast of 49 cents to 56 cents, down from 60 cents to 65 cents Tiffany had estimated before the Sept. 11 attacks on the United States.
Tiffany, which also forecast a minimal rebound in global sales in the first half of 2002, said in a statement higher gross margins and expense control minimized "adverse effects on net earnings".
ABN AMRO analyst Christine Kilton-Augustine said the results were largely in line with forecasts, but reflected continued weakness in the business conditions facing Tiffany.
She said Tiffany nonetheless was able to offset sluggish growth trends by providing assortments that allowed consumers to continue buying lower price-point, higher-margin merchandise like silver.
Tiffany executives confirmed in a conference call with analysts there was "robust demand in silver jewelry".
"That product has been very popular and helps support gross margin expansion. Consumers are still going to get engaged and married and we believe Tiffany is a very high quality retailer, in a unique position of having no markdown risk," Kilton-Augustine added.
Tiffany -- known for its robin's egg blue gift boxes -- said net sales in the quarter fell 2 percent to $565.8 million from $576.4 million a year before, while sales at U.S. stores open at least a year, also known as same-store sales, fell 3 percent.
In January Tiffany had forecast an overall fourth-quarter sales drop of 3 percent. Looking ahead, the company said it also expects operating earnings to be modestly lower in the first half of 2002.
Same-store sales in Tiffany's flagship New York store fell 13 percent. the retailer said, adding the decline was fueled by a reduction in tourist-related customer traffic in the aftermath of the Sept. 11 attacks.
Tiffany projected first-quarter earnings per share seen between 16 cents and 17 cents. Analysts' forecasts for the first-quarter are for earnings between 16 cents to 20 cents, with a mean at 19 cents. In the year earlier first-quarter Tiffany recorded a profit of 19 cents.
"Forecasting retail trends is a difficult task in an uncertain environment, but our plans are premised upon an improvement in the second half 2002," Michael Kowalski, president and chief executive officer of Tiffany, said in a statement.
"We are now one month into 2002 and, in terms of early trends, we are seeing comparable store sales patterns in the U.S. and Japan similar to what we've experienced in the most recent months," he added. He said Tiffany expects to continue opening new stores in the United States, Japan and other international markets in 2002. REUTERS
© 2002 Reuters
