The New York-based luxury retailer reported earnings of $31.1 million, or 25 cents a share, compared with $127.4 million, or 96 cents a share a year ago. Revenue dropped 20 percent to $841.2 million. Earnings were 85 cents when job cuts and other one time items are excluded. On that basis, analysts had expected earnings of 79 cents, according to Bloomberg.
Tiffany forecasted net earnings from continuing operations of $1.50 to $1.60, a 33 percent decline in capital expenditures to $100 million, an 11 percent decline in revenue, and a single-digit percentage decline in net inventories and free cash flow (defined as cash flow from operating activities minus capital expenditures) in excess of $400 million. Same-store sales plunged 33 percent at its flagship New York City store. Wall Street analysts expected earnings of $1.68 and revenue of $2.57 billion.
"Tiffany has clearly not been immune from global economic turmoil in recent months and we are taking a cautious view to business conditions in 2009, Michael J. Kowalski, Tiffany CEO chief executive officer, said in a statement. "We have addressed our cost structure in order to maintain reasonably healthy levels of profitability and strong liquidity, and position Tiffany for future growth."
In the fourth quarter, Tiffany offered early retirement to about 800 U.S. employees, which combined with other job cuts will help it save approximately $60 million on a pre-tax basis this year. Talk of restricting Wall Street bonuses is not helping the luxury retailer either but investors liked what they heard and sent shares of Tiffany higher in pre-market trading.
Nonetheless, I don't think wealthy people are keen on drawing attention to themselves right now. Tiffany's products -- like key chain jewelry "crafted with utmost quality and suspended from fine, ball or oval-link chains, each one is elegantly expressed in 18 karat yellow or white gold, platinum with diamonds or sterling silver," as described on the company's website -- are a bit out of touch with the times.
But maybe the rich will show off their jewels in private.