NEW YORK — Citing holiday sales that clearly lacked sparkle, Tiffany & Co. warned investors Tuesday that the famed jewelry company had lowered its earnings guidance for the fourth quarter and full year.

On a morning conference call, Tiffany said worldwide comparable-store sales for the November and December period dwindled 1 percent, falling short of the company’s low-double-digit sales plan. Total sales for the two months rose 8 percent to $509.1 million and were up 6 percent on a constant exchange rate basis.

As a result, Tiffany said it is now planning for net earnings in the range of 57 to 62 cents a diluted share in the fourth quarter compared with its previous guidance of 60 to 65 cents. It also lowered its 2002 earnings forecast to between $1.25 and $1.30 a share, versus the $1.15 reported in 2001 and the $1.28 to $1.33 originally forecasted. Wall Street analysts on average had penciled in the New York-based firm to report earnings of 61 cents for the quarter and $1.23 for the year. Fourth-quarter sales were slated to grow about 8 to 10 percent.

Tiffany’s holiday season sales typically represent 80 to 85 percent of fourth-quarter sales. Fourth-quarter results are expected to be announced on Feb. 26.

Tiffany shares lost 47 cents, or 1.8 percent, in New York Stock Exchange trading Tuesday.

Tiffany also said it expects the first quarter to remain relatively soft, as growth should accelerate as the year progresses. In particular, it said it is expecting comps in the U.S. and Japan to be up in the mid-single digits on an annual basis, but less than that in the early part of the year. For 2003, Tiffany said it is being cautious by anticipating 8 to 12 percent growth in net earnings and sales.

"We obviously needed to reduce earning expectations for the fourth quarter due to the sales shortfalls we experienced, but as you can see, the impact was pretty modest," James Fernandez, Tiffany’s chief financial officer, said. "We still expect gross margin in the quarter to be lower than the prior year due to a combination of factors, including the sales mix and sales shortfall and the consolidation of Little Switzerland that carries a lower gross margin."U.S. retail comps rose 1 percent, below expectations of a mid-single digit increase, but better than the 3 percent drop reported in the comparable period last year. Comps rose 6 percent in November, but decreased 1 percent in December. Comp results reflect an increase in the number of transactions and traffic but that was offset by a decline in the average dollar spent per transaction. Sales at Tiffany’s New York flagship were equal to the prior year and comps at its branch stores rose 1 percent during the holiday season.

While the firm continued to experience considerable activity in big-ticket sales, sales volume and the number of those transactions, especially those greater than $50,000, were down from last year.

The international front is also challenging for Tiffany. The hardest hit area, Japan, saw comps decline 10 percent, below expectations of flat to negative 5 percent. Other foreign fronts saw comp increases, including the Asia-Pacific region, 9 percent, and Europe, 11 percent.

Direct marketing sales increased 11 percent to $56.9 million and combined Internet-catalog sales rose 20 percent. Business sales continue to be challenging, declining 3 percent on top of a 28 percent decrease last year. Business sales in the New York market rose 3 percent.

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