Tiffany & Co. (TIF - Get Report) posted stronger-than-expected first-quarter earnings Tuesday, but same-store sales fell sharply amid a "dramatic" decline in foreign tourist spending, pulling shares sharply lower in pre-market trading as it cut its full-year profit forecast.
Tiffany said earnings for the three months ending in April came in at $1.03 per share, down 9.7% from the same period last year but 2 cents ahead of the Street consensus forecast. Group revenues, Tiffany said, fell 3% to $1 billion, just shy of analysts' estimates, while same-store sales declined by a bigger-than-expected 2% thanks to what it said was "dramatically" lower global spending from foreign tourist.
Looking into 2019, Tiffany said it sees earnings per share rising by a "low single digit" percentage from last year, a forecast that's down from a prior estimate of a "mid single digit" advance.
"Our first quarter results reflect significant foreign exchange headwinds and dramatically lower worldwide spending attributed to foreign tourists," said CEO Alessandro Bogliolo. "That said, we were pleased that, at the core of our business, global sales attributed to local customers, led by sales in China, grew over last year's very strong sales results."
"We believe this growth in sales to local customers reflects progress in executing our strategic priorities, including innovations across products, communications and the customer experience, and that Tiffany is positioned for improving trends in the second half of 2019," he added.
Tiffany shares were marked 4.1% higher following the earnings release, however, and changing hands at $93.94 each, a move that would extend the stock's year-to-date gain to around 17%.
Tiffany said sales in the Asia region fell 1% to $324 million, while comparable sales fell 5% thanks to a stronger U.S. dollar, reflecting "lower spending attributed to foreign tourists."
That trend was replicated in the U.S., where total net sales fell 4% to $406 million, and could be extended into the second half of the year following a decision by China's Ministry of Culture and Tourism Tuesday to warn its citizens to "fully evaluate the risks of going to the United States, to understand the maintenance of public order of their destination, the laws and regulations, and to conscientiously raise their awareness of safety measures to ensure their safety."