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Tiffany Profit, Margin Jump

Its full-year estimate encompasses the existing consensus.
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third-quarter earnings rose 37% from a year ago as solid worldwide sales and continued strength in its wholesale diamond operations drove profitability.

The jewelry company earned $23.8 million, or 16 cents a share, in the quarter, compared with $17.4 million, or 12 cents a share, last year. Sales rose 8% from a year ago to $500.1 million on a 5% rise in worldwide same-store sales. Tiffany said its gross margin rose 90 basis points to 54.1% and its tax rate fell.

Analysts were forecasting earnings of 16 cents a share on sales of $505 million.

By region, U.S. retail sales rose 9% to $247.7 million on a 7% rise in comps; its New York flagship store had 12% sales growth. In Japan, comparable store sales in constant currency were unchanged, year over year, while total retail sales rose 5%. For the rest of Asia-Pacific, comps rose 4%.

Tiffany's direct marketing sales rose 4% to $27.3 million in the quarter while other sales rose 22% to $20.7 million, mostly because of the wholesale diamond business.

The company expects to earn $1.55 to $1.65 a share on year-over-year sales growth of 8% to 10% for all of 2005. Analysts were forecasting earnings of $1.64 a share on sales of $2.42 billion.

The stock closed at $42.14 Tuesday night, about 25.7 times the 2005 Thomson First Call estimate and 23 times next year's consensus.