Tiffany Q3 Profit Rises, But EPS Misses Estimates; Cuts FY Earnings Outlook

(RTTNews) - Tiffany & Co. (TIF) reported that its third-quarter 2015 net earnings increased from last year. But, net earnings declined 8%, excluding a prior-year charge, partly reflecting the negative effects from the strong U.S. dollar. The company cut earnings outlook for the full-year 2015.

Frederic Cumenal, chief executive officer, said, "As expected, the strong U.S. dollar continued to put pressure on our financial results, specifically from the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S..... We are well prepared to delight our customers as they celebrate this holiday season, and our management team's longer-term strategy continues to call for further strengthening Tiffany's solid position among global luxury brands, which we believe will ultimately drive improved financial results."

On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales rose 4%; on a reported basis, worldwide net sales were 2% below the prior year.

The company now projects adjusted net earnings for the year ending January 31, 2016 to be 5 percent to 10 percent below last year's $4.20 per share. Analysts polled by Thomson Reuters expect the company to report earnings of $4.04 per share for the year. Analysts' estimates typically exclude special items. Previously, the company expected annual adjusted earnings to be 2 to 5 percent below last year's $4.20 per share.

The company now projects free cash flow in excess of $500 million for the year, which is $100 million higher than the previous forecast.

Net earnings for the third-quarter significantly increased to $91 million, or $0.70 per share, from $38.3 million, or $0.29 per share in the prior year.

Net earnings for the quarter were $91 million, or $0.70 per share, compared with $99 million, or $0.76 per share, when excluding a pre-tax charge of $94 million, or $61 million and $0.47 per share after-tax, on the extinguishment of debt related to prepaying $400 million of long-term debt; and the year-over-year decline reflected the lower sales and higher selling, general and administrative expenses partly offset by a higher gross margin. Analysts expect the company to report earnings of $0.75 per share for the third-quarter.

Net sales for the quarter declined to $938.2 million from $959.6 million in the prior year. Worldwide net sales on a constant-exchange-rate basis rose 4% and comparable store sales increased 1% due to growth in Japan, Europe and Asia-Pacific partly offset by lower sales in the Americas. Sales growth was led by higher sales of fashion gold jewelry and statement jewelry. Wall Street expected revenues of $971.00 million for the quarter.