Tiffany quarterly profits up on improved sales
May 14, 2002 09:05:00 AM ET
Update 1
(Adds analyst comment, byline)
By Ellis Mnyandu
NEW YORK, May 14 (Reuters) - Luxury jeweler Tiffany & Co. (TIF) on Tuesday said first-quarter earnings rose 6 percent on improved U.S. sales and more purchases of cheaper but higher-margin items like sterling silver rings and bracelets.
Tiffany posted net income in the quarter ended April 30 of $32.7 million, or 22 cents a share, compared with $30.7 million, or 20 cents in the year-earlier period.
On April 25, the New York-based retailer boosted its forecast to 22 cents a share, from a range of 16 cents to 17 cents previously. Analysts polled by research firm Thomson Financial/First Call then ratcheted up their estimates to match Tiffany's projection.
Looking ahead, the 165-year-old company -- known for ultra high-end items like million-dollar engagement rings and sterling silver baby rattles -- forecast second-quarter profits at or tending toward the lower end of Wall Street's current expectations.
Tiffany said even though it is introducing new jewelry designs to keep customers buying, it sees the U.S. economic environment challenging in the near-term.
The retailer -- also known for its robin's-egg blue jewelry gift boxes -- projected an improvement in business conditions in the second half of the year.
David Schick, an analyst at SunTrust Robinson Humphrey said latest results underscored good business execution by Tiffany in a tough environment.
"Tiffany does not press panic buttons ... They make a very slight series of long-term business improvement decisions, like internal manufacturing and adding up more robust (product) offerings," he said.
UNSETTLED ENVIRONMENT
The jeweler projected second-quarter profits to range from 22 cents to 24 cents a share, which compares with a First Call consensus estimate of 24 cents. Analysts estimates range from 22 cents to 26 cents.
"Tiffany's internal initiatives are exciting and promising. However, the external environment remains unsettled with an uncertain near-term outlook," Tiffany President and Chief Executive Michael Kowalski said in a statement.
Tiffany attributed the earnings gain to gross margin improvement, product sourcing efficiencies and a favorable sales mix.
The company said sales in the latest quarter rose 3 percent to $347.1 million from $336.4 million in the prior year. Sales from stores open at least a year or same-store sale rose 2 percent, with the company's flagship New York store in Manhattan showing a same-store sales drop of less than 1 percent.
International sales rose a slack 1 percent to $147.6 million, while same-store sales in Japan -- the company's key market outside the U.S. -- also fell by a percent.
For the third-quarter, Tiffany forecast profits to range from 18 cents to 20 cents a share, and for the fourth-quarter it projected earnings between 64 cents and 67 cents a share.
Tiffany's business has suffered broad weakness since the middle of last year, mainly as a result of the U.S. economic slump and from the after-effects of the Sept. 11 attacks which kept tourist customers away.
Japan's economic woes have also not helped the company which operates boutiques in the Americas, Asia-Pacific and in Europe. It also sells its products on the Internet and via catalog operations. REUTERS
© 2002 Reuters
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