March 21 - Tiffany reported strong sales in a weak retail environment, but its outlook lacked the sparkle that investors were looking for. Fred Katayama reports.
Customers kept buying more jewelry in those iconic blue boxes, but earnings at Tiffany just didn't have as much sparkle as investors had hoped. They brushed aside the strong sales momentum that helped Tiffany buck the trend during the holidays. And those sales would've been much stronger than the reported five percent were it not for the strong dollar. Margins expanded, and the company would've produced a profit had it not lost an arbitration case to Swatch for which it paid $450 million. That's more than it earned in all of last year. The company forecast net sales for the year expanding by a high single digit percentage. But Wall Street had higher hopes for its profit outlook. So despite the sales performance and the authorization of a $300 million buyback, the stock dropped at the market open, chipping away at its 34 percent gain over the last 12 months. KeyBanc analyst Edward Yruma took the results in stride, saying, "While estimates came in slightly below expectations, the company had solid top-line trends and continued margin expansion.... We think that the company has again guided conservatively." Tiffany plans to keep expanding globally with nine new outlets abroad and four more for the Americas.