Tiffany regains some missing sparkle

Its latest results easily beat expectations as upscale shoppers show more willingness to buy luxury goods.

By Jonathan Berr May 28, 2013 12:43PM
A Tiffany & Co. store front display is seen in Bethesda, Md. (Credit: © Gary Cameron/Reuters)Tiffany & Co. (TIF), whose name has been synonymous with luxury since 1847, lost its luster with Wall Street in recent months after posting disappointing results. The company's latest earnings still aren't great, but they were good enough to prove to investors that high-end consumers are starting to open their wallets again.

Tiffany reported on Tuesday morning that net income in the latest quarter rose 2.5% to $83.5 million, or 65 cents a share, from $81.5 million, or 64 cents a share, a year earlier. Revenue climbed 9% to $895 million, fueled by growth in Asia, especially Japan, and in the U.S. as well. Comparable-store sales, a key metric of sales at locations open at least a year, rose 8%. Excluding one-time items, profit was 70 cents per share, easily topping the 53 cents analysts expected. The revenue figure exceeded the $854.6 million analyst had forecast.

Tiffany, which is based in New York and operates 275 stores around the world, remains bullish, not surprising given Tuesday's news that consumer confidence surged to its highest level in more than five years. The company said it plans to add a net of 14 new stores this year, including four in China, three in the U.S. and three in Europe. It also plans to revamp its website later this year.

Shares of Tiffany were up around 3.5% to nearly $79 in midday Tuesday trading.

Investors were pleased that Tiffany reiterated its profit forecast for the year of $3.43 to $3.53 per share even though it expects softer sales in the Americas and Japan for the rest of the year. Good news, however, is on the horizon. One market researcher cited by Jeweller magazine estimates that the luxury market in 2025 will be five times larger than it was in 1995.

Tiffany's latest results prove that more people are willing to try to make their champagne wishes and caviar dreams come true now than they were during the Great Recession, when even wealthy consumers were reluctant to spend. The gains, however, are not across the board.

Last month, Prada reported better-than-expected results while LMVH, parent of Louis Vuitton, disappointed investors. And KKR (KKR), the big private equity firm, reportedly is considering trying to arrange a merger between upscale department stores Saks (SKS) and Neiman Marcus. 

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.


More on moneyNOW

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?

MARKET UPDATE

[BRIEFING.COM] The stock market began the last week of July on a quiet note with the S&P 500 ending less than a point above its flat line. Like the benchmark index, the Dow Jones Industrial Average (+0.1%) also posted a slim gain, while the Russell 2000 (-0.5%) and Nasdaq Composite (-0.1%) lagged throughout the session.

The major averages were awakened from their weekend slumber with an opening retreat that pressured the S&P 500 below its 20-day moving average (1975). Even though ... More

MSN MONEY'S