Tiffany downgrades its profit forecast

Luxury jewelry chain Tiffany & Co., New York, on Wednesday cut its profit forecast for the balance of fiscal 2001, as the attacks on the World Trade Center and Pentagon and a weak economy cut into sales at its U.S. stores, Reuters reported.

Tiffany joins a growing number of high-end retailers including Federated Department Stores Inc. which have said the Sept. 11 attacks coupled with economic uncertainty, have hurt business.

Tiffany said its expects earnings in the range of 12 cents to 15 cents per diluted share in the third quarter, compared with 24 cents a year earlier. For the fourth quarter, the jeweler forecast earnings of 49 cents to 56 cents per diluted share, compared with 56 cents in 2000, Reuters reported.

In August, Tiffany said it expected to earn 22 to 24 cents a share in the third quarter and 60 cents to 65 cents in the fourth quarter.

Net sales are expected to decline about 10% in the third quarter, primarily due to lower sales in U.S. stores, Reuters reported.

“Weak economic conditions in the U.S. have affected our business since last year’s fourth quarter and comparisons to the prior year were made more difficult by robust conditions in the first three quarters of 2000,” Michael Kowalski, Tiffany’s president and chief executive officer, said in a statement.

Sales at stores open at least a year, or same-store sales, declined 19% in the August-September period, which includes a 36% decline since September 11, Reuters reported. In that two-month period, U.S. sales declined 30% in Tiffany’s New York flagship store. The New York stores accounted for 12% of total company sales in 2000.

For the full fiscal year 2002, Tiffany said it expects modest earnings growth. For 2001, earnings are expected to range from $1.05 to $1.15 per diluted share, Reuters reported. A year-ago, the jeweler earned $1.26 a share, Reuters reported.