Shares plunge 7% on weaker outlook
- Last Updated: 12:22 PM, May 25, 2012
- Posted: 11:38 PM, May 24, 2012
Tiffany is starting to look downright tarnished.
Shares of the New York-based jeweler slid nearly 7 percent yesterday after the company cut its outlook for this year’s sales and profits on worse-than-expected quarterly results.
Business at the retailer’s Fifth Avenue flagship — a longtime cash cow for the company — dropped 4 percent as crowds of tourists from Europe and Asia thinned, execs said.
Indeed, sales were soft worldwide including the US, which capped overall first-quarter earnings at a gain of just 0.6 percent, missing Wall Street’s expectations.
Tiffany shares lost $4.21 to close at $57.59.
Adding to its woes, Tiffany said separately this week it is in talks with jewelry designer Elsa Peretti to end their long-term licensing deal, which has accounted for 10 percent of Tiffany sales since 2009.
Tiffany said it has made an offer to Peretti, who the company said has voiced an interest in retiring. A deal would “likely improve cash flows and operating results in subsequent years,” according to a filing.
In Europe, consumer moods are “less than ideal,” execs said. Likewise, Asian markets, including China, have been disappointing.
The gloomy news led the company to cut its full-year forecast for revenue, which is now expected to grow between 7 and 8 percent. Previously, Tiffany had predicted 10-percent growth.
Tiffany slashed its full-year per-share profit outlook to between $3.70 and $3.80, down from prior guidance of $3.95 to $4.05.
Tiffany’s sales began to slow markedly in the US and Europe during the holidays, as Europe’s credit crisis and a bumpy stock market spooked shoppers.
For the quarter ended April 30, Tiffany had net income of $81.5 million, or 64 cents a share, up from $81.1 million, or 63 cents, a year ago. The year-earlier period included 4 cents in charges.
Revenue increased 8 percent to $819.2 million. Sales at stores open at least a year rose 4 percent.