NEW YORK — Tiffany & Co. hopes it has weathered the storm.
The retailer predicted a lackluster first quarter, coming off a “disappointing” fourth quarter, in which high silver costs and sluggish U.S. demand for entry-priced jewelry kept earnings flat. But the company said Friday that it sees strength in the second half of the year, boosted by rising sales in the Asia-Pacific region, coupled with growing demand for new, more affordable collections.
Tiffany, which managed to beat Wall Street’s fourth-quarter expectations, predicted better-than-expected earnings for the year, pushing its stock up 1.9 percent to $69.23 at the end of trading.
For the fourth quarter, ended Jan. 31, the company registered net income of $179.6 million, or $1.40 a diluted share, compared with year-ago income of $178.4 million, or $1.39. Net sales expanded 4.1 percent to $1.24 billion from $1.19 billion.
Analysts expected EPS of $1.36 on sales of $1.25 billion. Quarterly gross margins fell to 59.1 percent of sales versus 60.4 percent a year earlier.
“We dealt with economic conditions in 2012 that were more challenging in some regions,” chairman and chief executive officer Michael Kowalski said on the company earnings call. “We saw pronounced softness in sales of entry-level-priced silver jewelry, and overall sales weakness led to a timing lag in realizing the benefit from moderation in commodity costs.”
The ceo predicted earnings in the first quarter will decline about 15 percent to 20 percent due to “continued but diminishing gross margin pressure and higher marketing-related costs.”
Although the dip in silver sales is linked partially to economic pressure on Tiffany’s entry-level price consumer, Kowalski also pointed to the company’s “ongoing brand strategy,” which is “primarily focused on product development and marketing on mid- to higher-priced categories.”
He added, “Absent those pressures in subsequent quarters, we expect net earnings growth in the second, third and fourth quarters.”
Much of that growth is likely to come from the Asia-Pacific market, where the company continued to open more stores this year in China, Singapore and Australia. According to Tiffany, sales in the region rose 13 percent to $254 million in the fourth quarter.
Sales in the Americas increased 2 percent to $620 million as the New York flagship store, which accounts for 8 percent of Tiffany’s overall business, saw sales slide 3 percent. In Europe, sales expanded 3 percent to $146 million, while in Japan, sales fell 6 percent to $192 million.
In order to fuel growth during the year, Tiffany is banking on higher-priced jewelry, which includes gemstone pieces and gold and silver collections. The brand is also banking on growth from new collections priced under $500, including jewelry made from Rubedo, a proprietary alloy composed of copper, gold and silver, and flashier collections timed to the release of the film “The Great Gatsby” this spring. The Baz Luhrmann-directed movie will feature diamond and platinum designs by Tiffany, which, in turn, has plans to release its own Jazz Age-themed styles to be sold in its stores.
With that in mind, the company projected annual earnings from operations of $3.43 to $3.53 a share, which is in line with Wall Street’s $3.50 EPS estimate.
“We’ve entered 2013 with considerable enthusiasm. We know that the Tiffany & Co. brand remains strong and is increasingly admired and desired by customers in existing markets and in new markets we enter around the world,” Kowalski said. “The universal desire among consumers for extraordinary product designs, craftsmanship, quality and shopping experience has not diminished and we believe in fact will grow stronger.”
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye