Tiffany Profit Tops Estimates as Jeweler Raises Prices

Tiffany & Co. posted third-quarter profit that topped analysts’ estimates and boosted its annual earnings forecast as the rising U.S. stock market gave wealthy consumers the confidence to snap up higher-priced merchandise.

Net income in the quarter ended Oct. 31 rose 50 percent to $94.6 million, or 73 cents a share, from $63.2 million, or 49 cents, a year earlier, the New York-based company said today in a statement. Analysts projected 58 cents, the average of 21 estimates compiled by Bloomberg. The shares posted their biggest gain in more than two years.

Tiffany, the world’s second-largest luxury jewelry retailer, is benefiting from surging stock prices and rising home values that are bolstering affluent shoppers’ willingness to purchase discretionary goods such as jewelry and accessories. The company also was helped by price increases and falling precious metal costs.

“On the bottom-line earnings number, they blew it out,” Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis, said in a phone interview.

He recommends holding the stock.

Tiffany shares rose 8.7 percent to $88.02 at the close in New York, their biggest jump since August 2011. They have gained 54 percent this year, compared with a 26 percent advance for the Standard & Poor’s 500 Index. The index hit a record last week, capping its seventh straight weekly gain and leaving it poised for the best annual gain since 1998.

Higher Prices

Profit per share excluding some items will be $3.65 to $3.75 in the year ending Jan. 31, up from a previous forecast of $3.50 to $3.60 a share, Tiffany said. Analysts estimated $3.62, on average.

The higher prices and lower product costs widened Tiffany’s gross margin, or the percentage of sales left after subtracting the cost of the goods, to 57 percent from 54.4 percent a year earlier. Analysts estimated 55.1 percent, on average.

Revenue rose 6.9 percent to $911.5 million, topping analysts’ $889.1 million projection. In the Americas, sales at stores open at least a year rose 1 percent, bolstered by growth at the Fifth Avenue store. Asia-Pacific comparable sales gained 22 percent.

Tiffany said shoppers were drawn by its expanded fashion jewelry designs, including the Atlas collection featuring Roman numerals, as well as continued growth in fine and statement jewelry, with particular strength in its yellow diamond collection.

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

Before it's here, it's on the Bloomberg Terminal.