Luxury-jewelry retailer Tiffany & Co. (TIF) is slated to release its first-quarter scorecard before the markets open on May 29, with analysts projecting earnings of $0.20 per share on revenues of $533.03 million, lower than the previous year's earnings of $0.50 per share and net sales of $668.1 million.
As demand for jewelry is determined by personal income and world gold and silver prices, fine jewelry retailers are feeling the pinch of recession, coercing even the affluent consumers to hold back impromptu spending. In an effort to muddle through the slowdown, several companies, including Tiffany, are reducing workforce or tuning up inventories to discard slow-selling commodities.
Tiffany, the world's second-largest luxury-jewelry retailer, projects fiscal 2009 earnings from continuing operations to range between $1.50 and $1.60 per share, with worldwide sales estimated to decline nearly 11%.
During the fourth quarter, the retailer offered an early-retirement package to about 800 U.S. employees, with about 600 accepting the offer. Tiffany incurred a fourth-quarter charge of $0.47 per share related to the early retirement program and other staffing reductions.
With the early-retirement package and additional staff reductions, the management expects a 10% drop in worldwide staffing that is estimated to generate nearly $60 million of pre-tax savings in 2009, to be realized in selling, general and administrative expenses and in cost of sales.
Michael Kowalski, chairman and chief executive officer said, "We have addressed our cost structure in order to maintain reasonably healthy levels of profitability and strong liquidity, and position Tiffany for future growth."
For the preceding quarter, the company witnessed a 76% decline in profit that totaled $31.09 million or $0.25 per share, compared to $127.39 million or $0.96 per share reported a year ago, hurt by sales declines across all geographies and restructuring charges. Quarterly net sales dipped to $841.1 million from $1.05 billion in the previous year.
Among other fine jewelry retailers, Zale Corp. (ZLC) incurred a wider loss in the third quarter that amounted to $23.2 million or $0.73 per share compared to a loss of $16.8 million or $0.40 per share in the prior year quarter, hampered by lower revenues and a negative impact related to reduced outstanding share count. Revenues fell 20.5% to $379.11 million from $476.74 million a year earlier.
Signet Jewelers Ltd. (SIG) reported a fourth-quarter net loss of $424 million or $4.97 per share compared to a profit of $143 million or $1.65 per share in the year-ago quarter, hurt by a massive impairment charge coupled with lower sales. Quarterly sales declined to $1.124 billion from $1.385 billion in the previous year.
Recently, Signet Jewelers posted first quarter sales of $762.6 million, down 7.3% from $822.5 million in the same period of last year. Group same store sales for the quarter descended 2.9%. In the UK, same store sales were down by 4.2%.
Tiffany shares, which have been trading between $16.70 and $49.98 in the past 52 weeks, closed Thursday's trading session at $28.13. In the after hours session, the stock gained 17 cents or 0.60%.
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