Tiffany finds global crisis takes shine off jewellery

JEWELLER Tiffany cut sales and profit forecasts yesterday, citing the tough global economy, weakness in key markets such as New York and Asia, and lower expectations for Christmas.

However Tiffany, immortalised in the 1961 Audrey Hepburn film Breakfast at Tiffany’s, saw its shares rise 5pc in early trading as the reduction in the profit outlook was not as steep as Wall Street had feared.

Shares rose on its expectations that pressure on margins from higher gold and diamond costs will moderate this quarter and that gross margin will rise again in the run up to Christmas because of lower costs.

Analyst Paul Swinand said, ‘It’s the light at the end of the tunnel.’

The company reduced its global net sales growth forecast by 1 percentage point to a range of 6pc to 7pc – a far cry from the 30pc growth it had enjoyed a year earlier.

Tiffany lowered its full-year profit outlook to between $3.55 and $3.70 a share from $3.70 to $3.80, coming in line with Wall Street expectations of $3.64 per share.

CEO Michael Kowalski said it was necessary to give a ‘prudent’ forecast given the uncertainty hitting the world economy and its impact on consumer spending.

The slowdown in China – which has been the fastest growing market for luxury Western goods in recent years – has taken a toll.

Sales at the chain’s famous Fifth Avenue flagship store in New York have fallen 9pc.

Shoppers tend to pull back on buying jewellery more quickly than on fashion, analysts have said.