Tiffany Q3 Profit Up 50%, Results Beat View; Lifts Full-year Earnings Outlook

(RTTNews) - Luxury jeweler Tiffany & Co. (TIF) on Tuesday reported a 50 percent increase in profit for the third quarter from last year, reflecting strong demand for the company's high-end jewelry in the Asia-Pacific and Americas regions as well as margin expansion.

Both revenue and earnings per share for the quarter beat analysts' expectations. Looking ahead, the company raised its earnings guidance for fiscal 2013, while maintaining its revenue growth outlook. Shares of Tiffany are gaining more than 6 percent in pre-market trades.

Michael Kowalski, chairman and chief executive officer of Tiffany's said, "Operating earnings rose faster than sales, reflecting favorable product cost trends and ongoing well-controlled expenses. We're experiencing excellent customer response to our expanded fashion jewelry designs, highlighted by the ATLAS collection, as well as continued growth in our fine and statement jewelry, with particular strength in our yellow diamond collection."

The New York-based company's net earnings for the third quarter were $94.61 million or $0.73 per share, up from $63.18 million or $0.49 per share in the prior-year quarter.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.

Worldwide net sales for the quarter increased 7 percent, or 11 percent in constant currency, to $911.48 million from $852.74 million in the year-ago period. Analysts had a consensus revenue estimate of $889.51 million.

Worldwide comparable store sales for the quarter rose 7 percent, reflecting growth in all regions.

Total sales in the Americas region for the quarter grew 4 percent, or 5 percent in constant currency to $417 million, while sales in the Asia-Pacific region rose 27 percent, or 29 percent in constant currency, to $238 million.

In Japan, a negative translation effect from a substantially weaker yen versus the U.S. dollar caused total sales to decline 13 percent to $128 million. However, sales rose 9 percent in constant currency.

In Europe, total sales increased 7 percent, or 4 percent in constant currency to $104 million, led by sales growth in the United Kingdom. Other sales increased 14 percent to $24 million.

Tiffany's gross margin for the quarter improved 260 basis points to 57 percent from last year's 54.4 percent, benefiting from reduced product cost pressures, as well as price increases taken earlier in the year. A shifting sales mix toward higher-priced, lower gross margin products continued to offset a portion of these benefits.

Looking ahead to fiscal 2013, Tiffany raised its earnings guidance to a range of $3.65 to $3.75 per share from the prior range of $3.50 to $3.60 per share. The revised forecast excludes $0.05 per share of expenses tied to specific cost-reduction initiatives that were recorded in the first quarter.

However, the company reiterated its outlook for worldwide net sales growth in a mid-single-digit percentage in U.S dollars, and a high-single-digit percentage on a constant-exchange-rate basis.

Street is currently looking for full-year earnings of $3.62 per share on revenues of $4.01 billion.

Further, Tiffany maintained its outlook for net addition of 14 company-operated stores in the year, by opening six in the Americas, seven in Asia-Pacific and three in Europe, as well as closing one each in Asia-Pacific and Japan.

TIF closed Monday's trading session at $80.99. In Tuesday's pre-market, the stock is up $5.21 or 6.43 percent to $86.20.