No recession for the rich: Tiffany 4Q profit quadruples

Updated 14m ago
By Mae Anderson, AP Retail Writer

NEW YORK — Rising sales, particularly during the holidays, helped quadruple jeweler Tiffany & Co.'s (TIF) fourth-quarter profit, the company said Monday, indicating luxury customers are willing to spend more as fears about the economy lessen.

The quarter that ended Jan. 31 produced more than half Tiffany's fiscal 2009 profit, and the company, known for its signature turquoise boxes, forecast fiscal 2010 earnings ahead of Wall Street's expectations.

Tiffany earned $140.4 million, or $1.10 per share, compared with $31.1 million, or 25 cents per share a year earlier. Excluding a restructuring charge, Tiffany earned 86 cents a share in the year-ago quarter. There were no one-time items in the current quarter.

Revenue rose 17% to $981.4 million, with growth in all regions. Sales rose 14% in the Americas, driven by a "substantial" increase in the number of transactions, Mark Aaron, vice president of investor relations, said on a conference call.

Analysts polled by Thomson Reuters forecast profit of $1.13 per share on revenue of $970.9 million.

Luxury retailers suffered amid the pullback in consumer spending that accompanied the financial meltdown in late 2008. But as fears about jobs and the economy ease, sales have ticked up, particularly during the holidays, a key period for Tiffany.

Aaron said more Tiffany customers made purchases in the quarter than a year earlier, sales grew at all the chain's price levels, from silver jewelry under $500 to diamond jewelry over $50,000.

A broad rebound in consumer spending — which, including big-ticket items like health care and housing, accounts for about 70% of the gross domestic product — will be critical to any economic recovery. And recovering luxury spending is seen as a harbinger.

Sales in stores open at least one year — a key measure of a retailer's fiscal health because it is not skewed by stores closing and opening during the year — rose 11%, helped by a 22% rise at its New York flagship store.

Tiffany's year-old collection of pendant necklaces and chains with key-shaped charms, which sell for $150 to $35,000 and range from sterling silver to gold and platinum with diamonds, were a standout hit, the company said.

"From a merchandising perspective, it's probably appropriate to call 2009 the year of the key," Aaron said. Prices for the line, which launched last spring, range from $150 to $35,000.

For the year, profit rose 20% to $264.8 million, or $2.11 per share, from $220 million, $1.74 per share last year.

Revenue fell 5% to $2.71 billion from $2.85 billion a year ago.

In 2010, the company expects earnings from continuing operations of $2.45 to $2.50 per share. Analysts expect $2.43 per share.

Tiffany, based in New York, expects revenue to rise 11%, implying a total of $3 billion. Analysts expect $2.93 billion.

CEO Michael Kowalski said Tiffany has "begun the year with worldwide sales growth exceeding our first-quarter plan which calls for a high-teens percentage increase."

Contributing: AP Business Writer Michelle Chapman

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