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Investors had thought Tiffany would be able to weather the downturn in the economy better than other retailers due to its affluent clientele, but the drastic job cuts on Wall Street and the hit the wealthy have taken on their investment portfolios has changed the game for the jeweler.
"Customers have adjusted their spending in reaction to economic conditions and near-term uncertainties," Chairman Michael J. Kowalski said Wednesday in announcing a steep fall in third-quarter profit. "It is impossible to know when consumer confidence will be restored. We are still in the early stages of formulating our financial plans for 2009 but I can say that we will look for opportunities to increase market share, while simultaneously pursuing various cost reduction avenues appropriate for this environment, including a moderation in the rate of new store openings in 2009."
Tiffany (nyse: TIF - news - people ) said that it now expects earnings of $2.30 to $2.50 per share for full-year 2008, with sales expected to be flat to down 2.0%. The outlook is down from the company's previous forecast of $2.82 to $2.92. Analysts had expected $2.58 per share. In order to cut costs, the company expects to execute layoffs--it didn't specify how many.
Tiffany shares rose 0.4%, or 8 cents, to close at $20.91.
The New York-based jeweler earned $43.8 million, or 35 cents per share in the third quarter, less than half its year-ago profit of $101.5 million, or 73 cents per share, which included a gain of 48 cents per share on the sale-leaseback of its Tokyo flagship store. Sales in the quarter ended Oct. 31, slipped 1.0% to $618.2 million. Analysts on average had expected earnings of 25 cents per share on revenues of $643.8 million.
Strong international sales have offset past slowdowns in the U.S., but a mild sales uptick in Europe wasn't enough to pad the bottom line this quarter.
North American revenue decreased 7.0%, to $331.8 million, with sales at stores open at least one year, a key retail indicator, dropping 14.0%. The New York flagship store, which typically accounts for 10.0% of Tiffany's overall sales due to its high tourist traffic, logged a 5.0% decline in sales during the quarter. Asia-Pacific sales rose 3.0% to $206.0 million, while sales in Europe gained 16.0% to $58.2 million.
Go News Center Added by: jessie Add time: 2009/12/18 11:34:16 view >>
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