It's a less than ideal start to the holiday season for Tiffany & Co: the world's second-largest luxury jewelry retailer posted third quarter earnings results Tuesday morning that missed Wall Street's top and bottom line estimates as a consumption tax in Japan continued to drain consumer demand. Yet with comparable store sales growing 4% worldwide and 11% in the Americas, investors aren't punishing Tiffany shares in early Tuesday action and are instead sending them for a more-than 4% gain.
Tiffany reported $959.6 million in third quarter revenue, a 5% increase compared to the year-ago quarter but a figure that fell short of analysts' $970 million forecast. Net income for the quarter came in at $38.3 million, or 29 cents per share, a 60% decline over the prior-year period's $95 million (73 cents per share) in net earnings. Excluding special items -- including a pre-tax loss of $94 million related to the paying down of debt -- Tiffany's net earnings grew 5% to $99 million, or 76 cents per share, an earnings-per-share figure that missed the 78-cent Wall Street consensus.
"We were pleased with overall sales performance, especially in light of economic and geopolitical challenges around the world," Tiffany chief Michael Kowalski said in a statement Tuesday morning. "We continue to pursue exciting opportunities in marketing, merchandising and store expansion to support longer-term growth, and are especially encouraged with initial results from the recent launch of our Tiffany T jewelry collection.”
Worldwide comparable store sales grew 4% during the quarter -- 7% on a constant-dollar basis -- with 11% growth in the Americas offset by a 6% decline in Japan. A consumption tax that hit Japanese consumers on April 1st has been negatively impacting Tiffany's results since it took effect.
The company is maintaining its full-year 2014 forecast and on Tuesday reiterated that it expects $4.20 to $4.30 in full-year earnings per share. This forecast is based on a 35% tax rate and $250 million in capital expenditures.
In a separate statement released Tuesday morning, Tiffany also declared a 38-cent per-share dividend, to be paid on January 12 to shareholders of record as of December 22. The company also has $278 million remaining in the $300 million share-repurchase program that was approved in March of 2014.
Following the release of the earnings results, shares of Tiffany popped and at one point in the early trading session were more than 4%, an increase that led the stock to a new 52-week high of $110.60. Shares are currently just off that high, trading around $108 per share for a 3% gain. Year-to-date, the retailer is up 16%.
