Tiffany & Co., the world’s second largest luxury jewelry retailer, slashed its annual forecast after third quarter profit fell and jewelry sales dropped for the first time in almost seven years amid the global financial crisis, Bloomberg reported.
US jewelry sales at stores open at least a year worsened in November from October and may fall at most 35% in the fourth quarter, CFO James Fernandez said.
The fine jewelry retailer suspended share buybacks and said it would reduce capital spending, slow store openings and cut staff as consumers pull back on discretionary purchases amid sinking stock and home values.
“People will focus on the guidance,” David Schick, an analyst with Stifel Nicolaus & Co., said in an interview with Bloomberg. “What they said, which was most important, was that November continued to slip.
Things in luxury spending are very bad now. The question is, will they get better in February or later?” The Baltimore-based Schick recommends investors hold the shares.
Third quarter net income dropped to $43.8 million in the three months that ended October 31, from $101.5 million, when fine jeweler Tiffany benefited from the sale and lease back of its main Tokyo luxury jewelry store, the New York based company said today in a statement.
Sales declined 1.4% to $618.2 million as US same store sales fell 14%.
Cie. Financiere Richemont AG, based in Geneva, is the world’s largest luxury jewelry seller.
Tiffany operated 204 stores as of the end of the third quarter, 85 of them in North America.
