Tiffany's Profit Tops Estimates; Raises Forecast

Jeweler Tiffany reported a better-than-expected third-quarter profit Friday helped by stronger international sales and raised its full-year profit forecast, sending shares up more than 3 percent in early trading.

The New York-based jeweler is expected to derive a significant chunk of its sales in the December holiday shopping season. According to Spending Pulse, the retail data service of MasterCard Advisors, jewelers can derive up to 25 percent of their annual sales in December alone.

However, investors and retailers fear that U.S. consumers, facing high gas and food costs and a housing market downturn, will not spend their holiday dollars as freely this season as in past years.

"We are now one month into the all-important November-December holiday season and are pleased with overall sales growth that is meeting our expectations," Chief Executive Michael Kowalski said in a statement.

Kowalski said it was premature to extrapolate current results or comment on consumer spending since the vast majority of its holiday selling had not yet happened.

Net income rose to $98.9 million, or 71 cents a share, in the quarter ended Oct 31, from $29.1 million, or 21 cents, a year earlier.

Excluding an after-tax gain of 48 cents from the sale of its Tokyo store, and a 4 cent charge tied to a donation to the Tiffany Foundation, the company earned 27 cents a share, beating analysts' estimates of 25 cents a share, according to Reuters Estimates.

Sales jumped 18 percent to $627.3 million, also topping Wall Street's average expectation of $618.3 million.

International sales also advanced 18 percent, on a constant currency basis, helped by growth in most markets including Japan, which had previously faced declining sales.

U.S. retail revenue was up 12 percent, as sales in its New York flagship store rose 25 percent. Same-store sales rose 8 percent in U.S. stores.

Tiffany raised its fiscal 2007 earnings forecast to $2.69 to $2.74 a share from continuing operations, including the gain from the Tokyo flagship sale. It had previously forecast earnings of $2.64 to $2.69 per share.

The company also increased its full-year sales growth forecast by 1 percentage point to 15 percent.

In October, the jeweler announced plans for smaller stores that will sell higher-margin and more affordable products, in a move to cater to more middle income customers. The new store format could boost U.S. sales in the long run, Kowalski has said.

Tiffany shares were up $1.54 to $50.29 in early trading.