Mainenews reporter

Tiffany forecasts surprise decline in full-year profit

Tiffany forecasts surprise decline in full-year profit

Luxury jeweler Tiffany & Co forecast a surprise decline in full-year profit and reported an unexpected fall in second-quarter sales as a strong dollar discouraged tourist spending in the United States and reduced the value of overseas sales. The company’s shares fell about 5 percent in premarket trading on Thursday.TiffanyCoWBJ

Tiffany said it expects net earnings to fall 2-5 percent in the year ending January, compared with its earlier forecast of “minimal growth.” “The adverse effects from the strong dollar have been even more significant than initially expected, Chief Executive Frederic Cumenal said in a statement. New York-based Tiffany, which gets about half of its sales from outside the Americas, has said currency fluctuations have reduced sales by 2-7 percent in the past three quarters.

The average value of the dollar in the May-July period has risen about 19 percent from a year earlier. Tiffany’s total revenue fell 0.2 percent, to $990.5 million in the quarter ended July 31 from $ 992.9 million a year earlier. Analyst on average had expected sales to rise to $1 billion, according to Thomson Reuters I/B/E/S. Excluding currency effects, revenue rose 7 percent.

Net income fell 15.4 percent to $104.9 million, or 81 cents per share, due to higher expenses and a loan given to a diamond mining company. Excluding items, Tiffany earned 86 cents per share, while analysts had expected 91 cents. The company’s full-year forecast translates to a profit of about $3.99 to $4.12 per share. Analysts had expected earnings to rise to $4.26 per share from the $4.20 per shares Tiffany earned a year earlier. Tiffany’s shares were trading at $79 before the bell on Thursday. Up to Wednesday’s close, the stock had fallen 20.4 percent this year.