UPDATE 3-Tiffany sees gem of a holiday on luxury rebound

* Q3 EPS 46 cents vs Street view 37 cents

* Q3 global same-store sales up 7 pct

* Raises FY EPS, sees Q4 worldwide sales up 12 percent

* Expects to raise retail prices early next year

* Shares up 5.2 pct, hit all time-high
(Adds details from analyst call, byline, updates share move)

By Phil Wahba

NEW YORK, Nov 24 (BestGrowthStock) – Upscale jeweler Tiffany & Co
(TIF.N: ) posted quarterly results well above Wall Street
forecasts and suggested its holiday season performance would
top expectations on strong overseas sales and a rebound in U.S.
luxury spending.

Tiffany’s performance sent its shares up 5.2 percent to an
all-time high of $61.30.

The jeweler is reaping the rewards of an aggressive
overseas expansion to win shoppers in Asia’s emerging wealthy
class and to build a bigger European presence.

It now gets slightly more that half of its sales outside
the United States. Sales in Asia, excluding Japan, rose 20
percent in the third quarter. Sales rose 29 percent in Europe,
excluding the impact of currency movements.

“Tiffany has realized that it has to focus on these growth
markets. One of their great strengths is their global brand,”
said IBISWorld analyst Toon van Beeck.

The company expects its torrid growth to continue.

Chief Executive Michael Kowalski said sales were “exceeding
our expectations” a few weeks into the holiday season, which
accounts for one-third of Tiffany’s annual sales. The company
expects global sales to be up 12 percent during the quarter.

The U.S. Department of Commerce reported a another increase
in monthly consumer spending for October. [ID:nN23158923]

Retailers’ results, from the high end to the low end, have
shown how more affluent shoppers that feel secure in their jobs
are buying more discretionary items, while people under
pressure from a 9.6 percent unemployment rate are still
sticking to essential purchases only.

“The high-end is a good place to be in this environment,”
said Sterne Agee & Leach analyst Jennifer Milan.

RICH SHOPPERS TO THE RESCUE

Tiffany’s global sales at stores open at least a year rose
7 percent during the third quarter. In the Americas, Tiffany
reported same-store sales gains of 8 percent.

Tiffany’s net income rose to $55.1 million, or 43 cents per
share, for the quarter ended Oct. 31, up from $43.3 million, or
35 cents per share, a year earlier.

Excluding one-time charges, profit was 46 cents per share,
compared with Wall Street’s forecasts of 37 cents.

Total sales rose 14 percent to $681.7 million, surpassing
the average Wall Street forecast of $652.8 million, according
to Thomson Reuters I/B/E/S.

Tiffany raised its full-year profit forecast range by 12
cents to $2.72 to $2.77 per share, excluding items. On average,
analysts had been expecting $2.64 per share.

Tiffany’s performance, along with strong results from
leather-goods maker Coach (COH.N: ) and large sales gains last
quarter at Signet Jewelers Ltd’s (SIG.N: ) high-end Jared chain,
show big spenders are back in a big way.

Those affluent shoppers helped Tiffany cope with higher
silver, platinum and gold costs by absorbing an increase in
retail prices, which boosted its gross margin 3.7 percentage
points to 58.5 percent in the third quarter.

On a call with analysts, Tiffany’s head of investor
relations Mark Aaron said the jeweler expects to further raise
retail prices early next year to keep up.

This year, platinum costs have risen 13 percent, while gold
is up about 25 percent and silver prices up 47 percent.

But in a sign that consumer spending has still not trickled
down to lower income shoppers, Aaron said sales of items under
$500 had fallen in the Americas, in stark contrast to
double-digit growth for expensive jewelry

Tiffany is best known for $50,000 diamond rings, but
analysts estimate its less expensive goods account for as much
as one-third of sales.

Tiffany, which operates 225 stores globally, opened two new
U.S. stores, and another store in Taipei during the quarter.

Sales at Tiffany’s flagship store on Manhattan’s Fifth
Avenue fell 3 percent, though the company said that was because
a sale that took place in October last year happened in
November this year. In the New York area, same-store sales were
up 1 percent.

For BreakingViews commentary, click on [ID:nN2497575]
(Reporting by Phil Wahba, editing by Gerald E. McCormick and
Derek Caney)

UPDATE 3-Tiffany sees gem of a holiday on luxury rebound