Tiffany Q4 Results Miss View Amid Hefty Charge, To Buy Back Shares

(RTTNews) - Luxury jeweler Tiffany & Co. (TIF) Friday reported a loss for the fourth quarter compared to a profit last year, hit by a hefty charge. Adjusted earnings missed Wall Street expectations and so were revenues. Further, the company guided full year earnings below Street estimates. Separately, the company announced a new stock repurchase program.

In December 2013, Tiffany was ordered by the Netherlands Arbitration Institute to pay Swiss watchmaker Swatch Group AG (SWGAY, SWGAF) about $450 million plus interest as damages related to a failed long-term cooperation agreement signed in December 2007. Tiffany was charged of continued breaches of its obligations and duties under the agreement.

Tiffany posted a net loss of $103.6 million or $0.81 per share for the fourth quarter, compared to a profit of $179.64 million or $1.40 per share last year. The latest results included a $2.27 per share charge related to the adverse arbitration ruling.

Excluding the charge, net earnings were $1.47 per share, while it totaled $1.40 per share a year ago, reflecting sales growth and improved operating margins. On average, 23 analysts polled by Thomson Reuters expected earnings per share of $1.52 for the quarter. Analysts' estimates typically exclude one-time items.

Worldwide net sales rose 5 percent to $1.3 billion from $1.235 billion. Analysts estimated revenues of $1.31 billion.

On a constant-exchange-rate basis, worldwide net sales grew 9 percent and comparable store sales rose 6 percent due to higher sales in all regions.

Sales growth was led by fine and statement jewelry, new or expanded jewelry collections including the ATLAS, ZIEGFELD and HARMONY collections, as well as continuing strength in the iconic jewelry designs.

In the Americas region, total sales rose 6 percent to $659 million, and were up 8 percent to $275 million in Asia-Pacific.

Tiffany's business in Japan performed well, but sales dropped as a result of adverse currency. In Europe, total sales increased 10 percent to $161 million.

For 2014, the firm expects net earnings in a range of $4.05 to $4.15 per share. Analysts project annual earnings of $4.28 per share. Adjusted earnings totaled $3.73 per share in 2013.

Worldwide net sales are seen increasing by a high-single-digit percentage on a constant-exchange-rate basis, with all regions expected to achieve growth in their total sales and comparable store sales.

The company also said its Board of Directors approved a new stock repurchase program to buy back up to $300 million of Tiffany's Common Stock through open market transactions, effective immediately.

The previous program expired at the end of January. The new program will expire on March 31, 2017.

TIF closed down 1.8 percent at $91.17 on Thursday. The stock is falling 2.9 percent in pre-market activity.