(Reuters) - Tiffany & Co (TIF.N) lowered its fiscal-year sales and profit forecast for the third straight quarter and reported lower-than-expected revenue and earnings after a drop in same-store sales in its key Asia market.
Shares slid more than 8 percent in premarket trading on Thursday.
The high-end jeweler, famed for its blue boxes, has banked heavily on new markets, particularly Asia, where it gets nearly one-quarter of its business and is its fastest-growing segment. But the region has been affected by the economic slowdown in China.
Sales at Asian stores open at least a year fell 4 percent, excluding currency effects.
Tiffany now expects global net sales to rise between 5 percent and 6 percent for the year ending in January, down one percentage point from its most recent forecast,
Chief Executive Michael Kowalski said the company had a “cautious” near-term view of the global economy, but expects results to start improving during the current holiday season, when Tiffany rings up one-third of annual sales.
Sales were also weak in its least expensive category, silver jewelry, suggesting price-conscious shoppers were hesitant to spend money on items they didn’t need right away.
Tiffany gets about one-quarter of its sales from relatively inexpensive items such as sterling silver key charm.
It projected full-year profit of $3.20 to $3.40 per share, down from an earlier range of $3.55 to $3.70. Wall Street targeted $3.60 per share.
Global sales rose 3.8 percent to $852.7 million in the third quarter ended October 31, while sales at stores open at least a year across the chain rose 1 percent. Analysts expected sales of $859.2 million, according to Thomson Reuters I/B/E/S.
Net income fell to $63.2 million, or 49 cents per share, for the quarter, from $89.7 million, or 70 cents, a year earlier. The latest result was 14 cents below Wall Street projections.
In the Americas, sales rose 3 percent, largely because of improving business at its Fifth Avenue flagship store, where sales were up 5 percent. Same-store sales rose a mere 1 percent.
Europe, with the exception of Britain, also showed improvement. Same-store sales rose 8 percent in constant currency terms.
Shares were down $5.21 to $58.52 in premarket trading.
Earlier this year, consulting firm Bain & Co forecast that global luxury sales growth would slow. Last week, the head of French luxury group LVMH’s (LVMH.PA) watches and jewelry division said luxury brands still faced challenges in China.
The slowdown comes as Tiffany plans to open eight new stores in the region.
Reporting by Phil Wahba in New York; Editing by Jeffrey Benkoe