[Jewelry making - Article 00612] - [Orchid] Tiffany trims outlook on lower U.S. sales

[Tajbright]

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    I have only had time to scan subject lines of most posts recently,
    so this topic may have been covered recently; if so, I apologize. 

    The price of gold has been soaring and I have been using the
    following web site to track it (I am trying to pick the optimal time
    to recycle my scrap!): (kitco.com) This morning MarketWatch posted an
    article about Tiffany's poor Holiday sales and the general outlook
    for the luxury/jewelry market. Thought some of you might want to read
    it. 

    Theresa Bright 

          Tiffany trims outlook on lower U.S. sales
          By Andria Cheng, MarketWatch

          Last update: 12:15 p.m. EST Jan. 11, 2008 

          NEW YORK (MarketWatch) -- In another sign that slowing
          consumer spending may finally be hitting the luxury sector,
          upscale jewelry retailer Tiffany & Co. lowered the top end of
          its profit forecast on Friday after a decline in holiday sales
          in the U.S. 

          The company's shares had their largest decline in
          three-and-a-half years. Full-year profit excluding items would
          be as much as $2.28 a share, lower from a previous projection
          of $2.30, the New York-based company said Friday.
          Fourth-quarter profit excluding costs to write down some watch
          inventory was expected to be $1.19 to $1.22 a share. Analysts,
          on average, estimated profit of $1.22 a share in the fourth
          quarter and $2.30 a share in the year, according to Thomson
          Financial. 

          Tiffany shares dropped 13% to $35.04, their worst decline
          since August 2004. Its drop led the decline in retail stocks. 

          Comparable-store sales in the U.S. for November and December
          declined 2% after sales slowed for products costing more than
          $50,000. International tourists that had boosted flagship
          store sales in travel markets like New York weren't enough to
          make up for declines in suburban locations. Comparable sales
          in Japan, one of Tiffany's top markets, also declined more
          than analysts expected. Declining housing and credit markets
          have hurt the upper rung of the income bracket as well,
          lessening the wealth effect, investors said. 

          "The upscale consumer isn't bullet proof," said Alan Lancz of
          Alan B. Lancz & Associates, which has a short position on
          Tiffany shares. "The consumer is going to pull back. It's
          going to hurt everyone." Chart of TIF U.S. retailers on 
Thursday
          reported their worst holiday sales in five years after
          economic concerns led to more budget-conscious shoppers. See
          full story. Luxury retailers' Saks Inc. and Nordstrom Inc.
          showed a slowdown in sales growth rates. 

          "Up until the middle of last year, you can count on luxury
          being there for you," said Michael Niemira, chief economist of
          International Council of Shopping Centers. "It's been less
          reliable. You also see some high end consumers weakening." 

          Tiffany's U.S. comparable-store sales decline missed the
          company's original forecast of a mid-single digit increase,
          after a drop in the number of transactions. Total U.S. sales
          rose 4% to $449.1 million. Comparable sales are a key retail
          performance metric that excludes results from new and closed
          locations. 

          "It was a challenging holiday season," said Chief Financial
          Officer Jim Fernandez on a conference call. "There is
          uncertainty about macro conditions and the state of consumer
          spending in the U.S." While the New York flagship saw a 10%
          increase in sales driven by foreign tourists, the seven
          suburban locations in the New York area saw their
          comparable-store sales falling 10%. 

          Engagement jewelry in the $10,000 to $50,000 range and silver
          jewelry in the $500 to $1,000 range were the bright spots, the
          company said. International sales rose 18% to $334.8 million.
          Excluding currency transaction impact, sales increased 12%.
          Same-store sales rose 5%, driven by gains in most countries.
          Sales in Japan declined while Asian markets outside of Japan
          surged 24%. 

          Tiffany said it's increasing its store base by 12% to 15% this
          year, mostly overseas, driven by demands in markets in Asia and
          Europe. End of Story Andria Cheng is a MarketWatch reporter
          based in New York.
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