Tiffany + 0.99% & Co Tiffany Thornton. profit slipped 30% as the retailer of jewelry, high-end due record weaker demand, burdened by high cost of precious metals and diamonds.
Shares of New York-based company fell by 6.2 percent Thursday after its third fiscal quarter results substantially missed Wall Street expectations, Tiffany also once again, cut its full-year estimate.
The jeweler now expects earnings per share between $3.20 and $3.40 on net sales of 5% to 6% growth, down from its prior view of $ 3.55 to $ 3.70 on the growth of 6% to 7%.
[image] Natalie Keyssar for the Wall Street Journal
Silver jewelry has been lower category of diamonds on sofa during the quarter, while goods above $500 has been growing.
The results reflect in part weak demand, said Mark Aaron, Tiffany investor-relations Chief. Silver jewelry sale has continued to be the lowest category, while commodity prices above $500 a, in most cases, the growth of the sales and units, said.
“While the remains of economic short-term Outlook uncertain, that we believe that we are well-positioned for the holiday season and we go along with exciting store, products and plans of marketing,” said Chief Financial Officer Patrick McGuiness.
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For the quarter ended October 31, Tiffany reported a profit of 63.2 million $, or 49 cents per share, compared to 89.7 million $, or 70 cents per share, a year earlier.
Sales rose by 3.8% to 852,7 million $. Analysts surveyed by earnings from Thomson Reuters expected 63 cents per share on revenue of 859 million $.
At the flagship store of Tiffany New York, which has been closed for two days as a result of superstorm Sandy, sales increased 5% on top of an increase of 24% the previous year.
Overall, the company has recorded a 3% sales rise in the Americas, which accounted for the largest portion of the total and 2 percent in the Asia-Pacific region. Sales were flat in the Japan, but increased. 6 per cent in Europe. On a constant currency basis, all regions have increased.
Weakness of the global economy weighed on high-quality diamonds and jewelry rings vendor, as he has on other luxury retailers. A trend that started in the last holiday season, the company posted narrower margins, although it appears to have won some sales traction in the United States and Europe.
The gross margin narrowed to 54.4% 57.9% in the cost of inputs has increased by 12%. Tiffany noted that its margin decline is largely continuous high precious metal and diamond costs and sales mix favouring more expensive products, low-margin.
Some analysts believe that the jeweller through a rough patch that will not last. “We continue to see Tiffany as a brand of premium luxury and believe the weakness [in stock] after today’s release provides an opportunity to purchase long term,” said Laura Champine, analyst at Canaccord Genuity retail.
Chief Executive Officer Michael Kowalski said quarterly revenues were less than what the company expected gross margin was lower than expected while its effective tax rate was higher.
He said Tiffany continues to maintain a conservative short term perspective about the world economy, but expects to see better results over time parties.