By  on March 29, 2006

NEW YORK — Tiffany & Co. on Tuesday said although fourth-quarter net earnings declined 35.3 percent, a 6 percent sales gain bolstered results on an earnings-per-share basis, which easily surpassed Wall Street's estimate.

Shares initially fell after the announcement, but the stock rose in the afternoon session, closing the day up 1 percent to $38.91.

The luxury jewelry retailer stirred speculation in January that it might be in play as an acquisition because the board ended a stockholder rights plan, or poison pill. Financial sources said talks of a sale have died down over the past month. Meanwhile, the retailer has continued its store-opening push.

Last week, Tiffany said it was opening two more stores in China, one in Beijing and another in Shanghai. It already has one store in each of those cities. Two additional stores are set to open in Japan, but five have closed in the country. Also in the pipeline are store openings in Vancouver and Vienna.

Over the past six months, store openings have been announced in Macau; China; Monterrey, Mexico; Tucson, Ariz.; Nashville; Indianapolis, and Atlantic City, N.J. Other initiatives include doubling the store base of Iridesse to around 14 and launching six jewelry collections designed by architect Frank Gehry in select U.S. and Japanese stores.

Michael Kowalski, chairman and chief executive officer, said so far in the first quarter the company has seen "stronger-than-expected comparable-store sales growth in most international markets, including double-digit growth in Japan." As for the U.S., same-store sales have been "modestly below the prior year, reflecting a difficult year-over-year comparison."

On Tuesday, the company posted earnings in the three months ended Jan. 31 of $140.3 million, or 97 cents a diluted share, significantly higher than analysts' estimates for 84 cents. Comparatively, the company earned $217 million, or $1.48, in last year's fourth quarter, which had benefited from a $194 million one-time gain from the sale of the company's stake in Aber Diamond Corp.

Net revenues in the quarter rose 6 percent to $858.5 million. On a constant-exchange basis, net sales were up 9 percent, the company said, and worldwide same-store sales rose 6 percent. U.S. retail sales rose 8 percent to $449.3 million, and same-store sales rose 5 percent, helped by higher spending per transaction.

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