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NEW YORK CITY-Although Tiffany & Co. delivers a 37% increase in earnings and higher profit margins for third quarter, the fine jewelry retailer’s net sales increase 8% and worldwide comp-store sales grow by just 5%. While this falls short of Wall Street analysts’ sales expectation, during a conference call, Michael J. Kowalski, chairman and CEO, maintains the full-year 2005 net sales growth forecast of between 8% and 10%.

He points to comp-store sales strength in the US, which rose 7% for the quarter, and “progress in Japan,” along with new jewelry designs “which complement our core designs,” to ensure “we are competitively well-positioned.” Its full-year expectations, he says, are based on results for this quarter “and our expectations for customer demand during the holiday selling season.” Tiffany plans to report on holiday sales results in a conference call on Jan. 10.

Net earnings for the quarter were just under $23.8 million versus $17.4 million in the same quarter a year ago. For the first nine months of this year, net earnings were up 31% to $114.4 million.

Net sales for third quarter were slightly over $500.1 million, and net sales for the nine months of this year rose 10% to above $1.5 billion. US sales in the most recent quarter were up a total of 9%, compared with the 7% increase in US comp-store sales. Tiffany opened a store in San Antonio, TX during the quarter, bringing its total number of US locations to 51. The New York City flagship remains the star, with a 12% increase in sales during the quarter.

For the three-month period, US sales were $247.9 million, compared with $204.3 million in international, non-US, sales. Tiffany operates 95 stores and boutiques outside the US.

On a constant-exchange-rate basis, same store sales in Japan in third quarter were even with the comparable period a year ago. This contrasts with this year’s first nine months during which same store sales in Japan fell 3% compared with the first nine months of 2004. On the plus side, total retail sales in Japan rose 5% during the third quarter, reflecting the opening of units in Yokohama and Osaka and the closing of five older locations in Japan.

Direct marketing sales rose 4% during third quarter to reach $27.3 million, and were up 7% for the first nine months of this year to total of $86.6 million. The increases were attributed to increased average tickets on Internet sales and catalog orders.

In addition to the Tiffany brand units, the company sells diamonds wholesale and also operates Little Switzerland and Iridesse stores. Sales of wholesale diamonds rose 22% in third quarter and 43%, to nearly $82.1 million for the first nine months. Little Switzerland sales rose 10% and 12% for third quarter and first nine months, respectively. Iridesse, which focuses on pearl jewelry, began operations in late 2004. Its sales were not disclosed in the third-quarter summary of earnings, but added to overall sales growth, Kowalski said.

Shares of TIF stock fell $1.44 a share, down 3.42%, to close at $40.70 on Nov. 30, the day of the earnings report, a day in which the Dow Jones Index shed more than 82 points. The 52-week high, $43.80 a share of Tiffany stock, occurred just two days earlier, on Nov. 28, while the 52-week low was $28.60 on May 13 this year.

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