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Tiffany Raises Profit Forecast After Opening Stores

Tiffany Raises Profit Forecast After Opening Stores
Handbags sit on display at the Tiffany & Co. flagship store on Fifth Avenue in New York. Photographer: Ramin Talaie/Bloomberg

Nov. 24 (Bloomberg) -- Tiffany & Co., the world’s second-largest luxury jewelry retailer, raised its full-year earnings forecast after third-quarter profit rose 27 percent, helped by new stores and sales of handbags.

Profit excluding some items this year will increase to as much as $2.77 a share from $2.12 a year ago, New York-based Tiffany said today in a statement. Analysts estimated $2.64, on average. The shares advanced to a record.

The jeweler, led by Chief Executive Officer Michael Kowalski, introduced its first handbag collection in 20 years in September to extend the Tiffany brand. Other new accessories include men’s briefcases, purses, wallets and business-card holders. The company operated 225 stores at the end of the third quarter, 10 more than last year, with 6 being added in the Asia-Pacific region.

Tiffany jumped $3.06, or 5.3 percent, to $61.33 at 4:01 p.m. in New York Stock Exchange composite trading, the highest since the shares were sold to the public in May 1987. Tiffany has gained 43 percent this year. Cie. Financiere Richemont SA, the world’s largest jewelry maker, has jumped 59 percent this year in Zurich trading.

Net income at Tiffany advanced to $55.1 million, or 43 cents a share, in the three months ended Oct. 31, from $43.3 million, or 35 cents, a year earlier, according to the statement. Excluding costs related to the pending relocation of its headquarters, profit was 46 cents. Analysts projected 36 cents, the average of estimates in a Bloomberg survey.

‘Stellar Spender’

Revenue jumped 14 percent to $681.7 million, exceeding the $652.5 million average of estimates. Stock market gains have helped improve confidence among luxury consumers, who will be the “stellar spender” this holiday season, according to Michael P. Niemira, chief economist at the International Council of Shopping Centers.

Sales in the Americas, which make up more than half of Tiffany’s total, rose 9 percent. In Europe, sales gained 22 percent, while in the Asia-Pacific region they increased 24 percent.

Tiffany has “hiked prices to counteract the rise in commodities with no apparent detriment to consumer demand,” Brian Sozzi, a New York-based analyst for Wall Street Strategies Inc., wrote in a note today.

Sales at all luxury stores open more than a year will increase as much as 8 percent in November and December from a year ago, according to the ICSC.

To contact the reporters on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net; Ian Thomson in New York at ithomson2@bloomberg.net

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

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