Aber Sale Lifts Tiffany Net

Tiffany & Co.'s fourth-quarter and year-end earnings soared after a onetime gain from the sale of its equity stake in a diamond company.

NEW YORK — Tiffany & Co.’s fourth-quarter and year-end earnings soared after a one-time gain from the sale of its equity stake in a diamond company.

For the three months ended Jan. 31, the New York-based jewelry retailer reported that earnings vaulted 96.5 percent to $217 million, or $1.48 a diluted share, compared with earnings of $110.5 million, or 74 cents, in the same period a year ago.

The sale of the company’s stake in Aber Diamond Corp. resulted in a pretax gain of $193.6 million, boosting earnings per share by 85 cents for the quarter.

James Fernandez, chief financial officer, said during the company conference call that ownership of Aber shares offered little strategic value for Tiffany. “We made that investment in 1999, and accomplished an agreement to purchase a minimum of $50 million annually of diamonds that are [of] Tiffany’s quality,” Fernandez said. That accord will continue through 2013. “Instead of owning their stock, we felt we could better serve shareholders’ interest by deploying the proceeds from that sale toward other uses including share repurchases, additional relationships to give us greater control over the diamond-supply chain or for other general corporate purposes.”

Total sales for the period rose 10.7 percent to $810.1 million from $731.6 million. U.S. sales increased 10 percent to $397 million, aided by the opening of four stores, bringing the number of U.S. shops to 55. Comp-store sales at the New York flagship gained 12 percent in the quarter because of increased spending by tourists.

While international sales went up 10 percent to $300.8 million for the quarter, the company’s struggles in Japan continued. Comp-store sales in Japan fell 7 percent for the quarter, with total sales rising “fractionally,” the company said in a press release. The decline in Japan was attributed partly to unit volume decreases in certain silver jewelry and designer jewelry categories, the company said.

“It is clear that we were successful in the U.S. and in a number of international markets,” Mike Kowalski, chairman and chief executive officer, said during the conference call. “However, we face some unexpected margin-related challenges and despite new initiatives in Japan, they were clearly not sufficient to achieve sales growth there.”

This story first appeared in the March 1, 2005 issue of WWD.  Subscribe Today.

Direct-marketing sales, including Internet and catalogue, rose 6 percent to $81.4 million in the quarter.

For the year, earnings increased 41.2 percent to $304.3 million, or $2.05 a share, compared with earnings of $215.5 million, or $1.45 a share, in the previous year. Sales for the year increased 10.2 percent to $2.2 billion from $2 billion.