Tiffany Q2 Profit Up, Tops View, Sales Miss; Maintains FY16 Forecast

(RTTNews) - Luxury jeweler and specialty retailer Tiffany & Co. (TIF) reported Thursday slight increase in second-quarter net profit on the absence of prior year's charge, while net sales and comparable sales were weak. Earnings per share topped analysts' estimates, while sales missed their view. Further, the company maintained its fiscal 2016 forecast, expecting lower results.

In pre-market activity on NYSE, shares were gaining 4.54 percent to trade at $72.

For the second quarter, net earnings edged up 1 percent to $105.7 million or $0.84 per share from last year's $105 million or $0.81 per share that included a specific charge. Excluding charge, prior year's net earnings were $111 million, or $0.86 per share.

On average, 18 analysts polled by Thomson Reuters expected earnings of $0.72 per share for the quarter. Analysts' estimates typically exclude special items.

Worldwide net sales declined 6 percent to $931.2 million from last year's $990.5 million. Analysts were looking for revenues of $934.74 million for the quarter.

Comparable store sales declined 8 percent. On a constant-exchange-rate basis, worldwide net sales and comparable store sales declined 6 percent and 9 percent, respectively.

The company attributed the weak sales to declines in business to both local customers and foreign tourists in most regions.

In the Americas, total sales of $434 million were 9 percent below last year, with declines of 9 percent in comparable store sales.

In the Asia-Pacific region, total sales were down 6 percent and comparable store sales declined 12 percent as sales growth in China and Korea was offset by a continuation of significant declines in Hong Kong.

However, total sales in Japan grew 10 percent with comparable store sales growth of 13 percent.

In Europe, total sales declined 12 percent, due to 17 percent lower comparable store sales. Lower sales in continental Europe were partly offset by better performance in the United Kingdom.

Looking ahead, for fiscal 2016, the company continues to expect earnings per share declining by a mid-single-digit percentage from 2015's adjusted earnings of $3.83 per share, and worldwide net sales declining by a low single-digit percentage from the prior year.

Operating margin is projected below the prior year's 19.7 percent due to an anticipated increase in gross margin more than offset by SG&A expense growth.