Tourists Buying Less Luxury Items, Hurting Tiffany and Other Retailers
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Upscale jeweler Tiffany & Co. said it expected profit to fall in the first half of this fiscal year as a strong dollar hurts tourist spending at its stores in the United States and erodes revenue from other markets.
Weakness in the global economy and a strong dollar have discouraged tourists from buying luxury items, hurting companies including Tiffany, retailers Nordstrom Inc. and Macy's Inc., and fashion house Neiman Marcus Group Ltd. LLC.
Tiffany's reluctance to offer promotions has also prevented it from attracting local shoppers looking for deals, especially in the holiday season.
Shares of the company, which became a household name due to the 1961 Hollywood film Breakfast at Tiffany's, fell 2 percent in light premarket trading on Friday.
Tiffany said it expected profit per share to fall by 15 to 20 percent in the current quarter and by 5 to 10 percent in the second quarter, based on the trends seen so far.
The company, however, said earnings were expected to rise in the second half of the year ending January 2017.
Tiffany's sales fell 5.6 percent to $1.21 billion in the fourth quarter, the fifth straight quarter of decline.
Sales at stores open for at least a year fell 10 percent in the Americas, a bigger drop than the 9.4 percent analysts had expected, according to research firm Consensus Metrix.
Tiffany's net income declined nearly 17 percent to $163.2 million, or $1.28 per share, in the quarter ended Jan. 31.
Excluding items, the company earned $1.46 per share, beating the average analyst estimate of $1.40, according to Thomson Reuters I/B/E/S.
Tiffany's shares were trading at $69.75 before the bell.
Up to Thursday's close, the stock had fallen 18 percent in the past 12 months.
(Reporting by Ramkumar Iyer and Yashaswini Swamynathan in Bengaluru; Editing by Kirti Pandey)