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Tiffany & Co. Shares Gain as Company Reaches New 20-Year Deal with Elsa Peretti (TIF)

Shares of Tiffany & Co. (NYSE: TIF), a specialty retailer, have opened higher in trading today after the company signed a new 20-year licensing deal with designer Elsa Peretti. The deal ends uncertainty over a collection that accounts for 10% of TIF’s worldwide sales.

Peretti has been designing high-end jewelry exclusively for Tiffany since 1974. However, the designer had been considering ending the licensing deal with the retailer and selling TIF her intellectual property. The two parties could not reach an agreement though.

As per the terms of the new deal, which was reached last week, Peretti will receive a one-time payment of $47 million from Tiffany. In addition, the designer will also receive royalties for TIF’s use of her intellectual property.

The deal was disclosed by Tiffany in a regulatory filing today. Following the disclosure, shares of the New York City-based company opened sharply higher. At last check, TIF shares were trading 1.59% higher at $58.25. TIF shares fell more than 12% in 2012, compared to a gain of more than 13% for the S&P 500.

Tiffany reported its most recent quarterly results (Q3) back in late November. For the third quarter ended October 31, 2012, TIF had reported worldwide net sales of $853 million, representing an increase of 4% over the same period in the previous year. The company’s comparable store sales for the quarter rose 1%. TIF reported third-quarter net earnings of $63 million, or $0.49 per share, down 30% over the same period in the previous year.

For the fiscal year ending January 31, 2013, Tiffany expects net earnings to be between $409 million and $435 million. On a per share basis, net earnings for the fiscal year are expected to be between $3.20 per share and $3.40 per share.

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