Byline: Evan Clark

NEW YORK — Tiffany & Co.’s fourth-quarter profits were up a fraction, in line with reduced expectations but strong enough to push the luxury firm to its eight consecutive year of earnings growth above 20 percent.
Earnings for the quarter ended Jan. 31 were $84.7 million from $84.6 million a year ago. Earnings per share were 56 cents in both periods, in line with a Jan. 4 profit warning from the company and analysts’ reduced expectations. Before the warning, a product of the weak holiday season, Wall Street was looking for earnings in the range of 58 cents to 67 cents a share.
Sales for the quarter inched up 2.3 percent to $576.4 million from $563.2 million a year ago.
Even with the relatively flat results for the quarter, earnings for the year jumped 30.8 percent to $190.6 million, or $1.26 a diluted share, from $145.7 million, or 97 cents, a year ago. Sales for 2000 were up 13.3 percent to $1.67 billion, from $1.47 billion in 1999. Shares of the luxury firm, based here, rose 14 cents at $31.25 on the New York Stock Exchange Thursday.
In the quarter, domestic retail sales rose 1 percent to $292.4 million on a same-store sales decrease of 1 percent. The company’s New York City flagship store saw sales drop 5 percent, while comparable branch store sales were up 1 percent over a year ago. International retail sales were up 3 percent to $223.8 million in the quarter due to growth in most markets. Comps in Japan rose 8 percent in the quarter in local currency, but were flat with a year ago on a constant dollar basis.
Corporate, catalog and Internet sales, which come under the firm’s direct marketing division, rose 7 percent to $60.1 million in the quarter. E-commerce results “comfortably” exceeded the company’s expectations. The firm also said that it appears at least 50 percent of online sales are coming from customers who are new to Tiffany.
As Michael Kowalski, president and chief executive, told analysts on a conference call Thursday, “It was a year of balanced growth in our three channels of distribution.” He also said the year was defined by new store openings, new product introductions and a “substantial” number of new customers.
“We are not apologetic of our recent performance, because the current consumer environment appears to be affecting the performance of most retailers and, in fact, most other industries as well,” Kowalski asserted. “Despite the temporary slowdown in the business cycle, Tiffany’s competitive and financial strengths position us extremely well to maintain the normal pace of our strategic pursuit of expansion, merchandising and marketing opportunities.”
However pristine the company’s reputation for fine glassware may be, Tiffany’s chief financial officer, James Fernandez, told analysts on the call, “Our crystal ball is no clearer than yours.” He conceded that consumer confidence could very well stay down for the next few quarters and negatively impact projections.
Aram Rubinson, an analyst with UBS Warburg, said of Tiffany in a research note, “No bad news is good news. Weak high-ended consumer confidence lingers, but Street expectations may be low enough to compensate for that fact.”
For 2001, the firm expects net sales growth in the high single-digit range based on mid single-digit same-store sales domestically.
Along with much of the retail community, the firm is bracing for slower, or roughly flat, earnings growth in the first half and counting on an upswing in the latter half of the year. Fernandez said diluted earnings per share for the first quarter of 2001 would be in the 18 cent to 22 cent range, compared to 20 cents a year ago. Per-share amounts have been adjusted to reflect a two-for-one stock split in July 2000.
Kowalski concluded: “Tiffany’s success has always rested on the demonstrable superiority of our products and service. Our strategies have never been about fashion or luxury or excess. Tiffany is about things that last.”