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The crisis in Japan will rock Tiffany’s results, but not as badly as Wall Street feared.
The upscale jeweler said it expects sales in Japan, which accounts for nearly one-fifth of its business worldwide, will plunge 15 percent in the current quarter, mainly because of boutiques that were closed in the days following the country’s devastating earthquake, tsunami and nuclear crisis.
That – along with damped spirits among Japan’s luxury shoppers – will cut fiscal first-quarter earnings by a nickel a share.
Nevertheless, the company expects to report quarterly profit of 57 cents a share – 2 cents more than analysts’ forecasts – buoyed by strong results in Europe and Asia.
Many of the company’s 56 Japanese stores near the earthquake as well as in Tokyo “were closed last week but reopened over the past weekend,” Tiffany spokesman Mark Aaron said yesterday.
Tiffany’s shares, which have had a bumpy ride this month since the earthquake and tsunami hit Japan, rose more than 5 percent yesterday, gaining $2.93, to close at $60.22.
The luxury chain projected worldwide sales in 2011 will rise between 12 percent and 14 percent to $3.46 billion – ahead of Wall Street’s estimate of $3.37 billion.
In the fourth quarter, profit surged 29 percent to $181.2 million, or 43 cents a share, from $140.3 million, or $1.10, a year earlier. Total sales rose 12 percent to $1.1 billion.
Tiffany’s business in Japan has been lackluster for years. While sales rebounded last year from a multiyear slump to rise 8 percent, the company said the increase was driven by the strength of the Japanese yen vs. the dollar.
Shares of handbag maker Coach, which operates 171 stores in Japan that account for 20 percent of its business, rose more than 3 percent yesterday following Tiffany’s announcement.
Shares of Polo Ralph Lauren, which gets about 6 percent of sales from Japan, rose 2.1 percent.