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Tiffany Q4 Profit Misses Estimates, Yet Sees Growth In 2012


Tiffany & Co. (TIF) on Tuesday reported a decline in fourth-quarter profit, below Street projections, as margin pressure eroded benefits of higher comparable store sales. Looking ahead, the luxury - jewelry retailer projects fiscal 2012 earnings to beat market estimates on anticipated sales growth in Asia-Pacific and the Americas.

In its fiscal 2011, Tiffany's net earnings rose 19 percent and adjusted earnings grew 24 percent as sales were up 18 percent.

Michael Kowalski, chairman and chief executive officer, said, "Tiffany exceeded the goals that we had set at the start of 2011 for both sales and earnings growth, although we concluded the year with softer-than-expected results. Nonetheless, we remain focused on successfully executing our long-term strategies and pursuing Tiffany's substantial global growth potential in 2012 and beyond."

For its fourth quarter, Tiffany's net earnings slid 2 percent to $178.4 million or $1.39 per share from the prior year's $181.2 million or $1.41 per share. Excluding a prior year non-recurring charge, earnings dropped 4 percent.

On average, 18 analysts polled by Thomson Reuters expected earnings per share of $1.42 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales increased 8 percent to $1.19 billion from $1.10 billion last year, and came in line with Wall Street analysts' expectation. Comparable store sales or sales from stores opened for at least a year, increased 6 percent as strong growth in Americas, Asia-Pacific and Japanese regions helped offset a 3 percent drop in Europe.

On a constant-exchange-rate basis, net sales rose 7 percent and comparable store sales grew 5 percent.

For the quarter, gross profit increased, while gross margin edged down to 60.4 percent from 60.9 percent a year ago, reflecting both higher product costs and shifts in product sales mix toward higher-priced but lower margin jewelry.

Looking ahead, Tiffany said its sales growth is tracking in line with internal expectations.

The company projects fiscal 2012 earnings per share in the range of $3.95 to $4.05, representing a 16 percent to 19 percent increase over the prior year. On an adjusted basis, earnings would grow 10 percent to 13 percent. Most of the expected earnings growth would occur in the latter part of 2012, Tiffany said.

The company also expects net sales to increase about 10 percent, primarily driven by sales growth in Asia-Pacific and the Americas, while operating margin would be approximately stable.

Analysts project annual earnings of $3.93 per share and sales of $3.91 billion.

Kowalski added, "we are confident that Tiffany & Co. is better positioned than ever in terms of its increased physical presence and brand awareness around the world, and we are confident in Tiffany's long-term, substantial growth potential."

For the year, the company also plans to open a net of 24 stores in important markets. The company expects that its expansion strategies and spending plans will ultimately contribute to strong relative performance within the luxury jewelry industry.

Tiffany shares are currently trading at $71.25 in pre-market activity, up $2.57 or 3.74 percent.

by RTTNews Staff Writer

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