Tiffany raises outlook after amazing quarter

Shares of the jeweler soar after a quarter that saw sales increase across all regions. With video.

By Kim Peterson May 26, 2011 1:33PM
The economy has turned around for the world's wealthy, and the wealthy have turned to Tiffany (TIF).

Shares of the jeweler are up more than 8% today to $75.79. Earlier this morning, the stock hit a record high of $76.22 after the company posted a blowout first quarter and raised its outlook for the year.

Luxury retail stocks went along for the ride as well. Shares of Saks (SKS) and Macy's (M) rose more than 1%, Coach (COH) jumped more than 4% and Nordstrom (JWN) climbed nearly 1%. "There is a targeted willingness to splurge again," an Edward Jones analyst told Reuters.

Post continues after this analyst interview about Tiffany's earnings:
Tiffany's worldwide sales rose 20%, and all regions saw an increase -- even after the jeweler hiked prices to cover rising costs for precious metals and diamonds. One of the biggest sales spikes was in the Asia-Pacific region, which saw a 37% increase. Even Tiffany's famous store on New York's Fifth Avenue reported a 23% sales jump.

"Customers are certainly aware of rising commodity costs and we have not experienced any meaningful resistance to higher prices," said Mark Aaron, a Tiffany investor relations executive.

Investors had been anxiously awaiting Tiffany's results in Japan, which represents 18% of the jeweler's overall sales. As it turns out, the recovery there is better than expected. Net sales dropped only 3% excluding the impact from the strong yen. One analyst said he had expected the sales decline to be in the high teens, the Financial Times reported, and Tiffany said in March that sales there would fall 15%.Image: Wedding ring (© Jamie Grill/Photolibrary/Photolibrary)

In all, Tiffany's first-quarter profit rose by 26% to $81.1 million, or 63 cents a share, up from $64.4 million, or 50 cents a share, in the year-ago period. Analysts were expecting 56 cents. If you exclude one-time charges and other items from both periods, the profit rose to 67 cents a share from 48 cents.

Sales rose 20% to $761 million, but excluding currency charges the increase was only 16%.

Tiffany seized upon the quarter to raise its full-year forecast to $3.45 to $3.55 a share. Analysts were only expecting $3.33 a share. In March, the jeweler had predicted earnings at $3.35 to $3.45 a share.

"The company continues to capitalize significantly upon not just strong, but improving worldwide demand trends for higher-end or luxury goods," one Oppenheimer analyst told MarketWatch.

Tiffany executives only showed one point of concern. The U.S. economy is hurting spending by some customers buying silver at entry-level price points, the company said, according to MarketWatch. The economy here will likely remain challenging for a while.
May 26, 2011 2:37PM
why shouldn't,t Tiffany show such success..with the likes of newt ($500,000) and all the richest people getting richer...the top 2% has all the money...great news for tiffany!!
May 26, 2011 5:12PM

Tiffany in response to their profit this quarter:


"Thanks, Newt!"

May 26, 2011 4:37PM
also - think how long the pipeline of gold and silver and platinum takes to move through distribution.  Some of the profit is linked to the rise of the base metals they use.  If they treated their inventories like gasoline outlets do, they increased prices as commodity prices moved.  They are now buying at higher input costs and will be selling at the new $1500 gold level.  I see next quarter less impressive as "old low dollar inventory sold high" gets replaced by "new higher dollar inventory sold the same"
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