NEW YORK ( TheStreet) -- Tiffany ( TIF) 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.
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. Follow TheStreet.com on Twitter and become a fan on Facebook.