Tiffany & Co.'s (TIF) third-quarter profit dipped 1 percent, partly on weaker U.S. sales as shoppers continued to curb their discretionary spending, the company said Wednesday.
Still, the luxury-goods seller known for its signature blue box lifted its full-year earnings and sales outlooks as it continued to tighten inventory and cut costs. It said U.S. sales declines are slowing and overseas sales are coming in better than expected.
The luxury sector has seen sales drop sharply during the recession, with shoppers cutting back on big-ticket items like expensive jewelry. But with signs that the economy is improving, Tiffany's quarterly performance bodes well, as it was above the retailer's expectations.
Tiffany earned $43.3 million, or 35 cents per share, for the period ended Oct. 31.
Earnings from continuing operations were 34 cents per share, which included a $4 million charge related to a diamond sourcing deal and a $5.6 million tax benefit.
Revenue dropped 3 percent to $598.2 million.
Sales at stores open at least a year fell 6 percent on a constant currency basis. That figure is a key indicator of retailer performance because it measures growth at existing stores rather than newly opened ones.
The results handily beat Wall Street predictions for profit of 24 cents per share on sales of $575.1 million. The estimates of analysts polled by Thomson Reuters normally exclude one-time items.
Tiffany's soft spot during the recession continues to be its domestic business. Sales in the Americas were down 9 percent, with revenue at its flagship New York store off 8 percent and sales for other U.S. stores open at least a year declining 11 percent. Overseas results were better, with Asia-Pacific sales up 10 percent and European sales climbing 12 percent.
But the retailer has tried to offset some of its sales weakness with cost-cutting and inventory management. Selling, general and administrative expenses declined to $261 million from $265.6 million, while net inventories were 6 percent below the previous year at quarter's end.
Tiffany boosted its full-year earnings from continuing operations guidance to a range of $1.88 to $1.98 per share. Its prior forecast was for a profit of $1.65 to $1.75 per share. The retailer anticipates annual worldwide sales will fall about 8 percent.
Analysts expect 2009 earnings of $1.77 per share.
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