Tiffany Sales Decline More Than Expected

Tiffany & Co. said its sales fell more than Wall Street had anticipated in the latest quarter, again hurt by reduced spending by tourists, and warned that earnings for the current period would be worse than it had previously feared.

Tiffany's stock, which has slid 11% this month and is down 27% from a year ago through Tuesday's close, was down 4.5% in premarket trading.

The luxury jeweler now expects full-year earnings to decline by a mid-single-digit percentage on a per-share basis, the low end of its prior estimate. It had previously guided for per-share profit to be unchanged from 2015 or down by a mid-single-digit percentage.

The company also now expects a decline in second-quarter earnings similar to the 15% drop in the first quarter. Tiffany had previously forecast earnings to be down 5% to 10% in the second quarter.

Chief Executive Frederic Cumenal, calling it a "difficult quarter," said the company faced numerous challenges in the latest period, including continued pressure from soft foreign tourist spending in the U.S., Europe and Asia, particularly in Hong Kong.

Sales at existing stores fell 9%. Analysts had projected a 6.8% decline, according to Consensus Metrix.

Still, Tiffany said its gross profit margin expanded to 61.2% in the quarter from 59.1% as it sold more profitable products, helped by price increases and lower costs.

Over all, Tiffany earned $87.5 million, or 69 cents a share, compared with $104.9 million, or 81 cents a share, in the year-earlier period.

Revenue slipped 7.4% to $891.3 million. Analysts polled by Thomson Reuters had expected 68 cents a share on $915 million in revenue.

Tiffany opened two company-operated stores in the first quarter and closed one location ending the quarter with 308 stores, compared with 298 a year ago.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

May 25, 2016 08:25 ET (12:25 GMT)

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