CS First Boston Cuts Tiffany & Co. Estimates

Analyst Richard Baum says the jewelry retailer suffers from brand erosion and weakness in silver jewelry

CS First Boston cut estimates for global jewelry-retailer Tiffany & Co. (TIF ) and kept its neutral rating.

Analyst Richard Baum says third-quarter earnings per share were well below his and the consensus 19 cents estimate. He notes U.S. and Japan comparable sales were below his estimates. European sales were below plan, as were direct marketing. He says gross margins are pressured by higher precious metals and diamond costs.

Baum cut his 81 cents fourth-quarter earnings-per-share estimate to 78 cents, $1.52 fiscal 2005 (Jan.) to $1.43, and $1.80 fiscal 2006 to $1.70. He believes brand erosion in Japan persists, and weakness in silver jewelry continues to pressure margins. He sees no signs of Japanese turnaround despite management's efforts. Also, U.S. business is not stellar, and faces difficult sales into the first-half of fiscal 2006.

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