Tiffany’s profit tops estimates in sign of luxury recovery

TIFFANY & CO. reported third-quarter profit that exceeded analysts’ estimates as demand improved in China and Japan, a sign that the worst of the global luxury market’s downturn may be over.  / BLOOMBERG NEWS/DAVID PAUL MORRIS
TIFFANY & CO. reported third-quarter profit that exceeded analysts’ estimates as demand improved in China and Japan, a sign that the worst of the global luxury market’s downturn may be over. / BLOOMBERG NEWS/DAVID PAUL MORRIS

NEW YORK – Tiffany & Co. reported third-quarter profit that exceeded analysts’ estimates as demand improved in China and Japan, a sign that the worst of the global luxury market’s downturn may be over.

Earnings were 76 cents a share in the period ended Oct. 31, the New York-based company said in a statement Tuesday. Analysts projected 68 cents, on average. Profit rose 4.5 percent, to $95.1 million in the third quarter compared with $91 million, or 70 cents per diluted share, in third quarter 2015.

Tiffany’s results follows reports from rivals such as LVMH and Gucci-owner Kering SA in signaling that a decline in demand for high-end goods may be nearing an end. Tiffany had been contending with weaker spending in Asia and a drop in tourism after terrorist attacks in Paris. The jeweler responded by introducing more products and trying to keep its costs and inventory in check.

The shares climbed as high as $83.25 in early trading New York. Tiffany had advanced 2.4 percent this year through Monday.

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Revenue rose 1.2 percent to $949.3 million, topping analysts’ $922.6 million average estimate. Sales at the company’s stores open for more than 12 months fell 3 percent on a constant-currency basis. Analysts had projected sales by that measure would slip 4.1 percent.

Tiffany’s Asian divisions led the gains, with net sales in the Asia-Pacific unit climbing about 4 percent to $247 million, driven by double-digit growth in China. Revenue in the Japan division increased 13 percent to $150 million, helped by the strengthening yen.

Americas sales

Elsewhere, net sales fell 10 percent in Europe and dropped 2 percent in the Americas. Tiffany said that its flagship New York store — which is next to the residence of President-elect Donald Trump, where security has been heightened since his election — has experienced adverse traffic effects and “continued sales softness.”

Tiffany maintained its forecast that earnings per share would decline by a mid-single-digit percentage this year and that global net sales would fall by a low-single-digit percentage.

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