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Tiffany Falls After Cutting Annual Profit Outlook on Slowing Sales Growth

Tiffany & Co. (TIF) declined the most in more than three years after the world’s second-largest luxury jewelry retailer reduced its annual earnings forecast, hurt by slowing holiday sales growth across all regions.

Tiffany tumbled 10 percent to $59.94 at the close in New York for the biggest decline since October 2008. The shares have dropped 28 percent since a 12-month high on July 7.

The retailer said “weakness” in spending from U.S. customers slowed the pace of sales in the Americas. Tiffany, which generates almost half of its sales outside of the U.S., reported a deceleration in sales in Europe, where the sovereign debt crisis prompted consumers to curb spending. Asian shoppers also limited purchases as China’s economy cooled.

“With all the uncertainty, it’s not a time for people to indulge in something like jewelry,” Marshal Cohen, chief industry analyst at NPD Group in Port Washington, New York, said today in a telephone interview.

Profit excluding some items will advance to as much as $3.65 a share in the year ending Jan. 31, the New York-based jeweler said today in a statement. That compares with a November forecast for profit of as much as $3.80. Analysts projected $3.77, the average of estimates in a Bloomberg survey.

Sales in November and December increased about 7 percent to $952 million worldwide. That was slower than the 11 percent gain Tiffany recorded in the same period a year earlier.

Overseas Sales

“Sales weakened markedly in the United States and Europe during the holiday season, reflecting restrained spending by consumers for fine jewelry,” Chief Executive Officer Michael Kowalski said in the statement.

Tiffany’s sales from outside the Americas have increased to about 50 percent from 38 percent in 2006, according to data compiled by Bloomberg. Ralph Lauren Corp. (RL) and Coach Inc. (COH) generate less than a third of their revenue outside the U.S.

In the Americas, which includes the U.S., Canada and Latin America, sales advanced 4 percent. Sales in the region increased 9 percent a year earlier. In Europe, sales climbed 1 percent, compared with a gain of 13 percent a year earlier. Asia-Pacific sales growth shrank to 19 percent from 23 percent, Tiffany said.

Europe’s gross domestic product will rise just 0.2 percent in 2012, the Organization for Economic Cooperation and Development in Paris said Nov. 28. China will expand 8.5 percent this year, the lowest pace in 11 years, the OECD forecast.

The jeweler plans to report full-year results on March 20.

The retailer reported adjusted earnings from continuing operations of $2.93 a share in the year ended in January 2011.

Cie. Financiere Richemont SA (CFR) is the world’s largest luxury jewelry maker.

To contact the reporters on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net; Ashley Lutz in New York at alutz8@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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