Tiffany Q3 Profit Tops Estimates But Lowers Outlook

November 26, 2008 7:41 p.m. EST

New York, NY (AHN) - Tiffany & Co. announced Wednesday third quarter earnings topped analyst estimates. However, the company cut its full-year earnings outlook and said a reduction of workforce may lie ahead.

The jeweler posted third quarter profit of $43.8 million or 35 cents a share, compared to $101.5 million or 73 cents a share in the same period a year ago. Last year's earnings included a benefit of 48 cents a share related to the sale-leaseback of its Tokyo store. Excluding the gain, earnings rose 13 percent compared to last year.

Revenue totaled $618.2 million, down 1 percent from last year. Excluding the effects of currency exchange rates, revenue fell 2 percent in the quarter.

Sales in the U.S. were particularly weak, down 7 percent sparked by a 14 percent drop in same-store sales. October same-store sales were especially weak, falling 20 percent in the quarter.

"The third quarter certainly posed obvious challenges for Tiffany and the entire retail industry," said CEO James Fernandez.

Tiffany did see a rise in gross margin to 66.3 percent, up 2 percent from last year.

Inventories rose during the quarter, up 12 percent. Fernandez attributed the rise directly to the sudden sales drop in September and October.

Looking forward, Tiffany expects full year 2008 earnings of $2.30 to $2.50 a share on flat to slightly negative sales. Earlier guidance was for earnings of $2.82 to $2.92 a share.