* Q3 EPS from operations 33 cts vs Street view 24 cts
* Smaller sales drop in U.S., says November starts well
* Ups FY EPS from continuing ops view to $1.88-$1.98/shr
* To triple China mainland stores within 5 years
* Tiffany shares up 4.1 percent
(Adds analyst comments, details from call, updates shares)
By Phil Wahba
NEW YORK, Nov 25 Tiffany & Co (TIF.N), which
resisted the temptation to deeply discount its jewelry in the
recession, posted earnings showing its upscale shoppers around
the world are coming back to life.
Tiffany's quarterly profit beat Wall Street expectations
and the company raised its full-year forecast on Wednesday,
saying early trends in November were encouraging ahead of the
holiday shopping season. Its shares rose 4 percent.
"Tiffany's results also speak to a company that defended
its brand during the depth of the market downturn last holiday
season by not discounting its merchandise," Brian Sozzi of Wall
Street Strategies Inc said in a note.
The company posted double-digit sales growth in Asia,
bolstered by mainland China and Singapore, and a slower rate of
decline for the United States.
"Global diversity is paying off for Tiffany," said Matt
Arnold, analyst with Edward Jones. "It not only protects
Tiffany, but it will yield a better growth profile as there are
plenty more places it could still go."
Global sales at stores open at least a year, an important
retail gauge known as same-store sales, fell 6 percent during
the third quarter and were down 10 percent in the United
The global sales declines eased as the quarter progressed,
Tiffany said, and November worldwide sales are signaling a
strong start for the holiday season.
After last year's bloodbath, when U.S. same-store-sales
fell 33 percent in the fourth quarter that included the holiday
season, any sign of domestic improvement comes as a relief.
"Tiffany's numbers are not that great in the U.S.," said
Laura Champine, a Cowen & Co analyst. "Jewelry will show some
growth next year, but that's only because last year was so
Tiffany shares were up $1.71 to $43.54 in noon trading.
Shares in Mid-tier jeweler Zale Corp ZLC.N, which beat Wall
Street earnings expectations on Tuesday, rose 0.6 percent.
Upscale U.S. department store Saks Inc SKS.N gained 3.9
percent. Saks last week posted a surprise profit, suggesting
the pressure on luxury retailers could be easing.[ID:nN17545573]
GROWTH IN ASIA, EUROPE
In Asia, excluding a weak Japanese market, total sales rose
18 percent in the quarter. Sales grew 12 percent in Europe,
where Tiffany opened a store in Amsterdam this week and plans
to open a second store at London's Heathrow Airport.
But at Tiffany's flagship store on Manhattan's Fifth
Avenue, which accounts for up to 15 percent of its global
sales, sales shrank 8 percent during the quarter.
Tiffany Chief Financial Officer James Fernandez said the
retailer plans to triple the number of stores in mainland China
to between 25 and 30 outlets, from nine, within five years.
Most retailers have reined in inventory levels to try to
avoid steep discounts on extra merchandise. Tiffany's
inventories were down 6 percent from year-earlier levels.
Tiffany raised its outlook for full-year profit from
continuing operations to between $1.88 and $1.98 per share. It
previously had expected $1.65 to $1.75. Analysts had forecast
earnings of $1.77 per share, according to Thomson Reuters
Earnings edged down to $43.3 million, or 35 cents per
share, in the third quarter ended on Oct. 31 from $43.8
million, or 35 cents per share, a year earlier.
Excluding one-time items, Tiffany's profit came to 33 cents
per share, beating the average of analysts' views at 24 cents.
Sales fell 3 percent to $598.2 million from $616.2 million.
Analysts had forecast $575.1 million.
The company operated 215 Tiffany & Co stores and boutiques
globally at the end of the third quarter.
(Editing by Michele Gershberg, Lisa Von Ahn and Tim Dobbyn)
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