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updated: 8/26/2011 9:46 AM

Tiffany 2Q profit soars, raises full-year outlook

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Associated Press

NEW YORK -- Tiffany & Co.'s net income jumped 30 percent in the second quarter, propelled by strong growth across all regions as high-income shoppers continued to be drawn to its jewelry and other goods.

The New York company's results handily beat Wall Street's expectations, and it raised its full-year profit forecast again due to the better-than-expected performance.

Tiffany's stock surged $3.21, or 5.1 percent, to $66.32 in Friday morning trading while the broader markets declined.

Tiffany, known for its turquoise boxes, has a customer base that leans heavily toward high-income consumers. Such shoppers tend to gravitate toward luxury goods. Spending on luxury items has rebounded faster than other segments since the recession as wealthier consumers feel more confident in making purchases, boosting earnings for companies like Tiffany.

For the period ended July 31, Tiffany earned $90 million, or 69 cents per share. That's up considerably from the $67.7 million, or 53 cents per share, it earned a year earlier.

Excluding 16 cents per share in costs tied to relocating its New York headquarters' employees, adjusted profit totaled 86 cents per share.

This easily beat the 70 cents per share that analysts surveyed by FactSet forecast.

Revenue rose 30 percent to $872.7 million, which was well above the $785.6 million that Wall Street predicted.

Investor relations Vice President Mark Aaron said during a conference call that Tiffany saw a double-digit percentage increase in sales across all jewelry categories.

High-end, engagement and gold jewelry all sold well. Aaron said silver jewelry, which sold well during the recession since it is relatively lower priced, posted a "reasonably good" sales increase.

Rising diamond and precious metal costs have prompted Tiffany to raise some prices. Aaron said the price hikes have occurred in most regions this year and affect various products.

Chief Operating Officer James Fernandez said rough diamond prices have climbed nearly 40 percent in the last year.

"The outlook for diamonds over the long term certainly looks as though rising global demand will continue to put pressure on supply and therefore price," he explained.

Tiffany's best performance in the quarter came in the Asia-Pacific region, where sales surged 55 percent to $173.2 million on strong performances in China and Korea. Sales in Europe rose 32 percent thanks mostly to local customers, but sales to foreign tourists -- particularly those from China and Russia -- increased as well.

Sales in the Americas gained 25 percent. The Americas region -- which is Tiffany's largest -- includes the U.S., Canada and Latin America.

Sales at the company's flagship New York store -- a favorite of foreign tourists -- soared 41 percent, Aaron said.

Even Japan, which is still regaining its footing following an earthquake, tsunami and nuclear scare earlier this year, posted a 21 percent sales increase.

"We are extremely pleased by these results which confirm the growing global appeal of Tiffany's product offerings," Chairman and CEO Michael Kowalski said in a statement.

Revenue at stores open at least a year increased 22 percent. This metric is a key gauge of a retailer's performance because it excludes results from stores recently opened or closed.

Kowalski said the retailer's first-half performance is allowing the company to stay confident about its potential for the rest of the year, even though economic uncertainty remains.

Tiffany is now predicting that its full-year earnings will be between $3.65 and $3.75 per share, compared with a previous forecast of $3.45 to $3.55 per share. The prior guidance had been raised in May from a range of $3.35 to $3.45 per share.

Tiffany's new outlook assumes a high-teens percentage increase in revenue.

Analysts foresee earnings of $3.55 per share.