Tiffany Shares Tumble After Jeweler Cuts Annual Forecast

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Tiffany & Co. shares fell the most in more than 10 years after a sluggish holiday season spurred the luxury jewelry chain to cut its annual forecast.

Sales in November and December declined 1 percent to $1.02 billion worldwide, the New York-based company said today in a statement. Currency fluctuations and a continued slump in Japan took a toll on the results, along with a surprise slowdown in its home market.

Tiffany had been counting on the Americas to help offset weaker results overseas, especially in Japan. That approach faltered over the holidays, when sales in its home region fell 1 percent to $544 million, compared with an increase of 6 percent a year earlier. A stronger dollar, meanwhile, ate into international sales, turning 9 percent growth in Europe into a 1 percent gain when converted into U.S. currency.

“Tiffany’s holiday season was softer than we had anticipated,” Laura Champine, a New York-based analyst at Canaccord Genuity Inc., said in a note to clients. “The Americas segment appears to have run out of steam.”

The shares fell 14 percent to $89.01 in New York, the biggest drop since August 2004. The stock advanced 15 percent in 2014, its second straight year of gains.

The holiday-period decline compared with a 4 percent increase a year earlier.

‘Disappointing’ Sales

“Clearly, sales for the holiday period were disappointing,” Chief Executive Officer Michael Kowalski said in today’s statement. “Sales in the Americas declined slightly after a very strong start to the year.”

Currency challenges will continue to weigh on results, Tiffany said. The retailer now expects earnings for the year ending Jan. 31 to be $4.15 to $4.20 a share, compared with a prior forecast of $4.20 to $4.30.

“While we are still in our planning process, we believe these factors will likely result in our planning low- to mid-single-digit sales and earnings growth in 2015,” Kowalski said.

The results also underscore Japan’s dimming status as a luxury market. The country’s sales in U.S. dollars declined 16 percent to $113 million. The rest of the Asia-Pacific region fared better, growing 7 percent to $210 million on that basis.

Of Tiffany’s almost 300 company-operated stores, 123 are in the Americas, with 73 in the Asia-Pacific region, 56 in Japan and 38 in Europe. The company added 10 stores in 2014, including on in Russia.

The domestic weakness was unexpected, Ike Boruchow, a New York-based analyst at Sterne Agee & Leach Inc., said in a note to clients.

“Tiffany reported underwhelming holiday comparable sales,” he said. “Performance by region was quite varied.”

(Updates share prices in fifth paragraph.)
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