Tiffany Two-months Worldwide Net Sales Rise 4%; Backs FY13 Adj. EPS View

(RTTNews) - Luxury jeweler Tiffany & Co. (TIF) reported that its worldwide net sales in the two-months ended December 31st rose 4% to $1.03 billion. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales increased 8% due to growth in all regions, and comparable store sales increased 6%.

For fiscal 2013 ending January 31, 2014, the company forecasts net earnings, before certain charges, in a range of $3.65-$3.75 per share, unchanged from its previous forecast, and compared with $3.25 per share in 2012. Analysts polled by Thomson Reuters expected the company to report earnings of $3.78 per share for fiscal 2013. Analysts' estimates typically exclude special items.

The forecast excludes an after-tax charge to be recorded in the quarter ending January 31st of about $300 million, or $2.33 per share, related to an adverse arbitration ruling.

The forecast also excludes $0.05 per share of expenses tied to specific cost-reduction initiatives that were recorded in the first quarter.

GAAP earnings per share are expected to be in a range of $1.27-$1.37 for the year ending January 31, 2014.

Michael Kowalski, chairman and chief executive officer, said, "Tiffany enjoyed a good holiday season with overall sales results in line with our expectation, and we were pleased to see growth across our fine and statement, engagement and fashion jewelry categories. Based on these sales results and related margins, we expect that full year earnings before certain charges will meet the most recent forecast we provided in November."

The company stated that it expects to report its fourth quarter and full year results on Friday March 21st. It will also provide its detailed plans for fiscal 2014 ending January 31, 2015 when it reports its full year results.

In late-December 2013, Tiffany & Co. said it had been ordered by the Netherlands Arbitration Institute or NAI, to pay Swiss watchmaker Swatch Group AG (SWGAY, SWGAF) a total of 402.7 million Swiss Francs or about $450 million plus interest as damages related to a failed long-term cooperation agreement signed in December 2007. Tiffany was charged of continued breaches of its obligations and duties under the agreement.

Tiffany then said that it was reviewing options with its legal counsel, but added that it would assure that it had sufficient financial resources to pay the full amount. The company added that the award would see it recording a charge of about $295 million to 305 million in the fourth quarter.

The company had noted that the recording of charges would see its full-year 2013 earnings guidance being slashed by about 60 percent or $2.30 to $2.35 per share from the previous forecast issued on November 26 in a range of $3.65 to $3.75 per share, implying a full-year guidance in the range of $1.35 to $1.40 per share.

Swatch had officially terminated the joint venture with Tiffany in September 2011, citing material breach of contract and pressed claims for damages in December 2011 against Tiffany. In March 2012, Tiffany filed a counterclaim of 541.9 million francs with the Court of arbitration in charge. However, the counter-claim of Tiffany was integrally dismissed after being vigorously contested by Swatch as having no factual or legal basis.

In December 2007, Swatch and Tiffany announced a strategic alliance to further the development, production and worldwide distribution of Tiffany brand watches. The two companies were to collaborate on design, engineering, manufacturing, marketing, distribution and service.