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Tiffany reports decline in sales for first time in five years

By Danielle Haynes
Tiffany & Co. reported a fourth-quarter decline in sales, the first drop in five years. File photo by John Angelillo/UPI
Tiffany & Co. reported a fourth-quarter decline in sales, the first drop in five years. File photo by John Angelillo/UPI | License Photo

NEW YORK, March 20 (UPI) -- Tiffany & Co. on Friday reported a decrease in fourth-quarter sales, the first time the company has had a decline in five years after a boost in luxury good sales in the recovering U.S. economy.

The jewelry and gift company reported $1.3 billion in sales in the fourth quarter of 2014, one percent less than the previous year. Net earnings were $196 million or $1.51 per share.

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Tiffany said worldwide sales would have increased by three percent had it not been for the recent strength of the U.S. dollar. Much of the company's customer base -- more than half -- is international and they're finding that with the strengthening dollar, those luxury goods are suddenly becoming more expensive.

For the full year, sales rose five percent to $4.25 billion and net earnings were $484 million or $3.73 per share. That up from $181 million or $1.41 per share in 2013.

"By now it should be clear that Tiffany is facing challenges from global economic uncertainties, especially from the effect of a strong U.S. dollar on the translation of foreign-denominated sales into dollars and on foreign tourist spending in the U.S.," Tiffany President Frederic Cumenal said. "As a result, we have adopted a cautious approach in our planning for the coming year."

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Tiffany is anticipating a 30 percent decline in earnings for the first quarter and a lesser decline in the second quarter. There should be a double-digit percentage net earnings increase for the rest of the year, the earnings report said.

Tiffany and other luxury brands like Mercedes-Benz and LVMH, which owns Louis Vuitton and Givenchy, have done extraordinarily well as the U.S. economy recovers from the recession, which peaked in 2009. First quarter sales for Tiffany in 2011 shot up 20 percent, for example.

"This group is key because the top five percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending," Mark Zandi, chief economist of Moody's Analytics, told The New York Times in a 2011 interview. "That was key to why we suffered such a bad recession -- their spending fell very sharply."

Tiffany & Co. stock (TIF) dropped 3.59 percent as of 2 p.m. EST from opening after the release of its earnings report.

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