Analysts had expected earnings of 84 cents per share based on sales of $871.16 million. The quarterly drop in profits was due in part to a 2004 fourth quarter pre-tax gain of $194 million as a result of the firm's sale of its shares in a diamond mining company, execs at the jewelry retailer said.
Diamond and jewelry retail sales also impacted the bottom line with US sales growing just 8% compared to 10% growth in the same quarter last year. Sales at stores open at least one year were also off, coming in at 5% compared to 7% in the year-ago period. At Tiffany's flagship store in New York, sales dropped 2% compared with a 12% increase in 2004.
"The flagship store's performance was affected by lower foreign tourist spending in the fourth quarter, which more than offset higher sales to local resident customers," Mark Aaron, the company's vice president of investor relations, said in a conference call Tuesday announcing the quarterly results.
Internationally, sales fared better, climbing 10% due largely to an 8% growth in the company's Japan market, where it recently opened two new stores. Japan, Tiffany's largest market, accounts for a quarter of the Tiffany's sales. The luxury jewelry retailer has 52 stores in six Japanese cities and operates 150 stores and boutiques worldwide.
For the full fiscal year ending January 2007, Tiffany stood by its forecast, predicting earnings in the range of $1.77 to $1.82 a share, 10% sales growth, and at least 12% growth in pre-tax earnings.
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