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Tiffany Profit Tops Estimates Led by Demand in Asia

Tiffany & Co. (TIF), the world’s second- largest luxury jewelry retailer, reported fourth-quarter profit that topped analysts’ estimates led by demand in Asia.

Net income in the quarter ended Jan. 31 rose 0.7 percent to $179.6 million, or $1.40 a share, from $178.4 million, or $1.39, a year earlier, the New York-based company said today in a statement. Analysts projected $1.36, the average of 19 estimates compiled by Bloomberg.

Tiffany said sales in the company’s Asia-Pacific region advanced 13 percent to $254 million in the quarter. The region’s sales were helped by store openings in Singapore, China and Australia last year. Improved political stability and a desire to hedge against possible future inflation drove Chinese consumers to buy jewelry, said Liz Dunn, an analyst at Macquarie Group in New York.

“Asia-Pacific was strong because store openings helped and there has been an improving trend broadly in the jewelry business,” Dunn said. “You can see that in the China and Hong Kong retail reports.”

Dunn rates the shares neutral, the equivalent of a hold.

Shares Advance

Tiffany rose 1.9 percent to $69.23 at the close in New York. The shares gained 21 percent this year compared with a 9.2 percent increase for the Standard & Poor’s 500 Index.

Photographer: Jerome Favre/Bloomberg

A commuter stands in front of an advertisement for Tiffany & Co. jewelry at a tram stop in Hong Kong in Jan. 4, 2013. The company’s Asia-Pacific region sales were helped by store openings in Singapore, China and Australia last year. Close

A commuter stands in front of an advertisement for Tiffany & Co. jewelry at a tram stop... Read More

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Photographer: Jerome Favre/Bloomberg

A commuter stands in front of an advertisement for Tiffany & Co. jewelry at a tram stop in Hong Kong in Jan. 4, 2013. The company’s Asia-Pacific region sales were helped by store openings in Singapore, China and Australia last year.

Revenue rose 4.1 percent to $1.24 billion, meeting analysts’ estimates. Sales in the Americas rose 2 percent to $620 million while Europe posted sales of $146 million, a 3 percent increase.

Sales at the Manhattan flagship and at U.S. branches open at least a year declined 3 percent and 2 percent, respectively, after a disappointing holiday season.

U.S. sales were sluggish across the country among domestic shoppers, executives said on a conference call today. Chief Executive Officer Michael Kowalski said there was “pronounced softness” in jewelry at entry-level prices.

Executives cited the impact of the weak economy on lower- income consumers as well as the company’s long-term strategy of focusing less on silver jewelry under $500 and more on higher- priced jewelry to elevate its brand image.

Weaker Yen

Sales in Japan fell 6 percent to $192 million in the quarter, reflecting a weaker yen versus the U.S. dollar, Tiffany said. Chief Financial Officer Patrick McGuiness said on the call that the weaker yen will hurt sales and profit this year.

The company forecast full-year profit of $3.43 to $3.53 a share, excluding some items, and projected net sales growth of 6 percent to 8 percent. Analysts estimated profit of $3.47 a share, on average.

Tiffany said in January that it signed a 20-year agreement to keep selling jewelry by Elsa Peretti, which accounts for about 10 percent of its sales. The accord lets Tiffany retain exclusive rights to the designs, which include “Diamonds by the Yard” and iconic heart- and bean-shaped pendants.

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

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

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

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