Tiffany & Co lowers sales, profit views

(Reuters) - Tiffany & Co cut its fiscal-year sales and profit forecasts on Monday for the second straight quarter, citing the tough global economy, weakness in key markets such as New York and Asia, and lower expectations for the holiday season.

The jeweler reduced its global net sales growth forecast by 1 percentage point to range of 6 percent to 7 percent for the year ending in January.

Tiffany lowered its full-year profit outlook to between $3.55 and $3.70 a share from $3.70 to $3.80. But the reduction appeared to be no worse than what analysts had been bracing for, coming in line with Wall Street expectations of $3.64.

Shares of the company were up 6.4 percent at $62.25 in premarket trading.

Chief Executive Officer Michael Kowalski said in a statement that it was necessary to give a "prudent" forecast given the uncertainty slamming the world economy and its impact on consumer spending.

While other luxury brands such as Saks Inc proved resilient during the quarter, shoppers tend to pull back on buying jewelry more quickly than on fashion.

Also, Tiffany is far more exposed to Europe's and China's slowing growth than other high-end U.S. names are.

Global sales at Tiffany rose 1.6 percent to $886.6 million in the second quarter ended on July 31.

Sales at stores open at least a year fell 1 percent, excluding the impact of currency fluctuations. Same-store sales dropped 5 percent in the Americas and in the Asia Pacific, which includes China, which has been the fastest-growing market for Western luxury brands.

Sales in Europe only got a boost because of exchange rates favorable to Tiffany.

Sales at the chain's famous Fifth Avenue flagship, a favorite of the millions of international tourists in New York, fell 9 percent. That location generates almost 10 percent of revenue.

In many ways, Tiffany's growth was bound to be more modest than the 30 percent pace of a year earlier.

But it is the second quarter in a row that the company has lowered its forecasts. This time Tiffany did so in large part because it is assuming growth during the holiday season to be slower now.

Tiffany reported net income of $91.8 million, or 72 cents per share, for the quarter, compared with $90 million, or 69 cents per share, a year earlier.

The results missed Wall Street estimates by a penny a share. Analysts had been expecting a smaller profit because of rising precious metal.

(Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn)

Source: http://news.yahoo.com/tiffany-co-lowers-sales-profit-views-111606579--sector.html

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