High end jeweler, Tiffany & Co. (NYSE: TIF) reported lackluster fiscal first-quarter results on Thursday.
The Company announced that its first-quarter earnings edged up only 0.6%, even as it projected gloomy outlook for the rest of the year, citing slowing economic growth in many countries and softness in U.S. operations.
According to revised estimates, Tiffany’s world-wide sales are now seen increasing 7% to 8% this year, compared with prior guidance for 10% growth.
Commenting over the results, Tiffany officials said some softness in U.S. sales alongside a 4% drop at its New York City flagship store which relies heavily on European tourists for sales hurt its revenues.
The company also blamed slowing economic growth in China and “less than ideal” conditions in Europe for weaker than expected results.
The poor earnings and feeble growth forecast dented investors’ confidence with shares getting hammered in after-hours trading.
After posting better-than-anticipated sales and earnings growth in the first three quarters of 2011, Tiffany sales started to slide in the U.S. and Europe even during the critical holiday season, as the sovereign-debt crisis together with fragile consumer sentiment, curtailed the demand for luxury products.
For the quarter ended April 30, Tiffany profit stood at $81.5 million, or 64 cents a share, up from $81.1 million, or 63 cents a share, a year earlier.
While revenue increased 8% to $819.2 million, gross margin trimmed to 57.3% from 58.3%.
Meanwhile in Americas, which represents slightly less than half of the total, sales soared 3% to $386 million even as same-store sales were flat.
As of April 30, net inventories climbed up 27% to $2.2 billion, underpinning softness in demand for high end products.
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