Tiffany’s earnings tumble as sales slip

Tiffany & Co. on Wednesday reported third-quarter earnings that topped Wall Street expectations, but the luxury goods retailer warned of job cuts and lowered its 2008 outlook as consumers scale back on spending amid a tough economy.

Tighter credit and widespread layoffs have caused many consumers to cut back on nonessentials, and the forecast is gloomy for retail’s crucial holiday shopping season. Tiffany’s strong international sales had typically helped offset recent weakness in the U.S., but the company warns that Europe and Asia remain “challenging.”

For the three months that ended Oct. 31, the New York-based jeweler earned $43.8 million, or 35 cents a share, less than half its year-earlier profit of $101.5 million, or 73 cents, which included a gain of 48 cents a share on the sale-lease-back of its Tokyo flagship store. Excluding one-time items, profit rose 13% in the latest period.

Sales slipped 1% to $618.2 million as weak demand in the U.S. offset increased sales abroad.

The results beat analysts’ average profit estimate of 25 cents a share, according to a Thomson Reuters poll, though sales came in shy of Wall Street’s $643.8-million forecast.

Sales in Tiffany’s Americas region declined 7% to $331.8 million, with “substantial” decreases seen in the number of transactions in every region of the U.S. Same-store sales, or sales at stores open at least a year, dropped 14% in the U.S.

Tiffany lowered its 2008 earnings outlook to $2.30 to $2.50 a share, with sales expected to be flat to down 2%. That’s well below analysts’ $2.58-a-share outlook and the company’s previous estimated range of $2.82 to $2.92.

Tiffany shares rose 8 cents to $20.91.