Tiffany Disappoints Investors
NEW YORK (
) --
Tiffany
(TIF) - Get Report
is leaving investors wanting more.
While the jewelry retailer saw its fourth-quarter profit more than quadruple, Tiffany's results still missed analysts expectations and its positive sales growth was overshadowed by other concerns.
Investors already expected the bounce-back in sales during the holiday season for TIffany, as it was pre-announced on Jan. 12 and already factored into the stock.
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There has also been gross margin pressure over the past three quarters and diminishing opportunities for Tiffany to cut expenses, Wall Street Strategies analyst Brian Sozzi wrote in a note.
These concerns have all helped sending shares of Tiffany falling 5% to $45 in pre-market trading.
During the quarter, Tiffany earned $140.4 million, or $1.10 a share, compared with $31.1 million, or 25 cents a share, a year earlier. Analysts were expecting earnings of $1.13 a share. Last year's quarter was reduced by nonrecurring items of 56 cents a share.
Sozzi attributes Tiffany's earnings miss to a nearly five-fold increase in wholesale diamond sales, which is a lower-margin business. Price deflation in Japan's luxury market and its evolving mix of business in the U.S. also likely contributed to the upset.
TIffany's sales grew 17% to $981.4 million, while U.S. same-store sales shot up 11%. Tiffany also received a boost from European sales, which soared 29% to $122.9 million. Tiffany posted positive same-store sales in every country but Japan, and delivered its first positive U.S. comparable sales in six quarters.
Looking ahead, Tiffany expects worldwide sales to increase by about 11% and foresees full-year earnings in the range of $2.45 to $2.50 a share. Wall Street is looking for profit of $2.43 a share.
"The company does appear to have moved beyond its wholesale diamond issues and with sales growth internationally being a good story and a share buyback set to expire by the end of 2010, the outlook may be within reach," Sozzi wrote. "But, again, the Street was seeking a more robust story that did not materialize."
-- Reported by Jeanine Poggi in New York.
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