Luxury jeweler Tiffany & Co. (TIF) Friday reported a higher fourth-quarter profit that beat analysts' expectations, reflecting an increase in sales due to growth in most regions. However, the company posted lower earnings for the fiscal year. In the pre-market trading, the shares are up about 4 percent.
Michael Kowalski, chairman and chief executive officer said, "These quarterly sales results were consistent with the holiday trends we had issued in early January...financial results in fiscal 2012 were disappointing due to lower-than-expected sales growth and pressures on gross margin..."
For the first quarter, the firm anticipates net earnings from operations to decline nearly 15 to 20 percent due to gross margin pressure and higher marketing-related costs, to be followed by earnings growth in all subsequent quarters. According to the company, the forecast excludes $0.05 per share of expected first-quarter charges for staffing and occupancy adjustments.
For the fiscal year ending January 31, 2014, the company expects earnings from operations to be in the range of $3.43 to $3.53 per share, while 24 analysts project full-year earnings of $3.50 per share.
The company expects annual worldwide net sales growth of 6 to 8 percent in U.S. dollars. On a constant-exchange-rate basis, an expected high-single-digit percentage increase in worldwide net sales includes sales growth in all regions, ranging from a mid-teens percentage increase in Asia-Pacific to a low-single-digit increase in Japan.
In the fourth quarter, the company's net earnings increased to $179.64 million or $1.40 per share from $178.4 million or $1.39 per share in the previous year.
On average, 19 analysts polled by Thomson Reuters expected earnings per share of $1.36 for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter grew 4 percent year-over-year to $1.24 billion, which came slightly below analysts' estimate of $1.25 billion.
On a constant-exchange-rate basis, excluding effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales went up 5 percent. Comparable store sales equaled the prior year.
Total sales in the Americas region rose 2 percent and Asia-Pacific region sales climbed 13 percent, while sales in Japan declined 6 percent, reflecting a weaker Japanese yen compared to the U.S. dollar. In Europe, sales were up 3 percent from the preceding year.
Gross margins declined to 59.1 percent from 60.4 percent a year earlier, reflecting pressures from precious metal and diamond costs, a shift in sales mix toward higher-priced, lower margin products and reduced sales leverage on fixed costs.
For the fiscal year ended January 31, 2013, the company posted net earnings of $416.16 million or $3.25 per share, down from 439.19 million or $3.4 per share in the prior year. Net sales for the year increased to $3.79 billion from $3.64 billion in the preceding year.
Tiffany added 28 company-operated stores in the full year. As at the end of the fiscal year, it operated 275 stores, compared with 247 stores a year ago. It expects opening a total of 14 company-operated stores in the fiscal.
TIF closed Thursday's regular trading at $67.91 on the NYSE. In the pre-market activity, the shares are up 4.03 percent.
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