UPDATE: Tiffany Posts Downbeat Q3 Results, Lowers Sales Forecast

Shares of Tiffany & Co

slipped fell 2% in pre-market trading after the company reported weaker-than-expected fiscal third-quarter results and cut its sales forecast. The New York-based company posted quarterly net earnings of $38 million, or $0.29 per share, compared to $95 million, or $0.73 per share, in the year-ago period. Excluding non-recurring items, the company earned $0.76 per share. Tiffany recorded a pre-tax loss of $94 million, or $61 million and $0.47 per share after-tax, on the extinguishment of debt related to prepaying $400 million of long-term debt. Its revenue climbed 5% to $959.6 million. However, analysts were expecting earnings of $0.77 per share on revenue of $970.67 million. Tiffany's overall same-store sales gained 4%. In the Americas, total sales rose 10% to $459 million in the quarter, while total Asia-Pacific sales climbed 2% to $243 million. Total sales in Japan shrank 12% to $113 million, while sales in Europe gained 9% to $114 million. Gross margin widened to 59.5% from 57.0%. At October 31, 2014, cash and cash equivalents and short-term investments were $383 million, versus $521 million a year earlier. During the quarter, Tiffany opened a freestanding store in Tokyo. At October 31, 2014, Tiffany operated 294 stores, compared to the previous year's 283 stores. Michael J. Kowalski, chairman and chief executive officer, said, “We were pleased with overall sales performance, especially in light of economic and geopolitical challenges around the world. We continue to pursue exciting opportunities in marketing, merchandising and store expansion to support longer-term growth, and are especially encouraged with initial results from the recent launch of our TIFFANY T jewelry collection.” For the full fiscal year, the company affirmed its earnings forecast of $4.20 to $4.30 per share. However, it cut its sales growth forecast to a mid-to-high-single-digit percentage, versus high-single-digit percentage. Tiffany shares dropped 2.01% to $102.90 in pre-market trading.