Tiffany Sails Past Estimates
Tiffany's
(TIF) - Get Report
fourth-quarter earnings shot up 24% from a year ago, as blistering domestic sales and favorable currency translation helped offset continuing weakness in Japan.
The luxury jeweler earned $110.5 million, or 74 cents a share, in the last quarter compared with earnings of $89.3 million, or 60 cents a share, a year ago. Sales rose 18% to $731.6 million, with about 4 percentage points attributable to the weak dollar. Constant-currency same-store sales rose 10% in the fourth quarter over last year.
Analysts surveyed by Thomson One Analytics were forecasting earnings of 70 cents a share on sales of $716.7 million. Tiffany closed at $58.50 Tuesday night, down 45 cents, or 0.8%. The shares weren't doing appreciable volume in the Wednesday premarket.
The company predicted 2004 earnings will rise 12% to 15% from 2003's $1.45 a share on a sales gain of 11% to 13% over 2003's $2.0 billion. That comes out to earnings of $1.62 to $1.67 a share on sales of $2.22 billion to $2.26 billion. Analysts are forecasting 2004 earnings of $1.64 a share on sales of $2.21 billion, according to Thomson One Analytics.
The fourth-quarter sales gain reflects a 20% jump in U.S. retail sales to $359.4 million in the quarter on a 17% jump in domestic same-store sales; an 18% jump in international retail sales to $273.5 million; an 11% increase in direct marketing sales to $76.9 million; and an 8% increase in specialty retail sales to $21.8 million.
Tiffany investors have recently fretted about the company's performance in Japan, where macroeconomic weakness and changing consumer tastes have been a sore spot. Tiffany said that on a constant exchange rate basis, Japan same-store sales fell 7% in the latest quarter from a year ago, while total retail sales fell 2%. Same-store sales rose 19% in the rest of its Asia-Pacific region, however, and rose 13% in Europe.
On the cost side, selling, general and administrative expenses were 35% of sales in the latest quarter compared with 35.2% a year ago, reflecting a better leveraging of fixed costs to higher sales, while gross margin was 59.5% in the latest quarter compared with 59.7% a year ago, reflecting more sales of lower-margin diamond jewelry.