Tiffany Turns To Profit In Q4; Outlook Weak On Strong Dollar

(RTTNews) - Jewelry retailer Tiffany & Co. (TIF) on Friday reported a profit for the fourth quarter compared to a loss last year, when results included a legal charge.

Excluding items, adjusted earnings per share for the quarter matched analysts' expectations, while revenues missed estimates, as a strong U.S. dollar hurt sales.

Looking ahead, the company expects earnings for the first quarter to decline 30 percent from last year and earnings for fiscal 2015 to be below Street expectations, citing currency headwinds.

Frederic Cumenal, president of Tiffany, said, "By now it should be clear that Tiffany is facing challenges from global economic uncertainties, especially from the effect of a strong U.S. dollar on the translation of foreign-denominated sales into dollars and on foreign tourist spending in the U.S."

Tiffany's fourth-quarter net earnings were $196.18 million or $1.51 per share, compared to net loss of $103.60 million or $0.81 per share in the prior year. The prior-year quarter's results include a charge of $2.27 per share related to an adverse arbitration ruling. Excluding the charge, adjusted net earnings for the year-ago quarter were $189.80 million or $1.47 per share.

On average, 24 analysts polled by Thomson Reuters expected the company to report earnings of $1.51 per share for the latest quarter. Analysts' estimates typically exclude special items.

Worldwide net sales for the quarter declined 1 percent to $1.29 billion from $1.30 billion in the year-ago period. Analysts were looking for revenue of $1.31 billion for the quarter.

On a constant currency basis, worldwide net sales increased 3 percent, led by growth in Europe and Asia-Pacific, with the largest growth in the fashion jewelry category. Comparable store sales for the quarter declined 4 percent from last year.

In the Americas, total sales declined 1 percent to $653 million, but were flat with last year when currency impact was excluded. Comparable store sales decreased 2 percent. According to Tiffany, the recent strength of the U.S. dollar is having a negative effect on spending by foreign tourists.

In Asia-Pacific, total sales increased 4 percent to $284 million. However, total sales in Japan declined 13 percent to $148 million, reflecting weaker economic conditions affecting consumer spending.

In Europe, total sales were flat with last year at $162 million, while other sales grew 12 percent to $39 million.

Looking ahead to fiscal 2015, Tiffany forecasts minimal growth in net earnings per share from adjusted earnings of $4.20 in fiscal 2014. The company also projects full-year worldwide net sales to increase by a mid-single-digit percentage on a constant-exchange-rate basis, with sales growth in all regions.

The Street expects the company to earn $4.45 per share for the year, on 3.1 percent increase in revenues of $4.42 billion.

The forecast anticipates a decline of about 30 percent in the first quarter's net earnings and a more modest decline in the second quarter, followed by expected double-digit percentage net earnings increases in the third and fourth quarters.

Tiffany expects worldwide net sales in the first quarter to decline by about 10 percent, primarily due to a difficult comparison to strong sales growth achieved in Japan in the year-ago period and continued softness in the Americas.

Analysts expect the company to earn $0.92 per share for the first quarter, on 1.4 percent decline in revenues to $998.21 million.

For the second quarter, the company expects worldwide net sales to increase by a low-single-digit percentage in the second quarter.

TIF closed Thursday's trading at $86.37. In Friday's pre-market activity, the stock is down $2.87 or 3.32 percent to $83.50.