Tiffany 1Q Profit Climbs 26%, Raises Year Forecast

-- All major jewelry catagories saw robust sales

-- Shares hit record high

-- Lower-end US Tiffany customer tentative

NEW YORK -(Dow Jones)- Tiffany & Co.'s (TIF) fiscal first-quarter earnings rose 26%, as the luxury jewelry retailer continued to post double-digit sales growth with the aid of its increasing international presence.

The company raised its full-year outlook on the basis of the strength, saying worldwide sales growth in the early part of the current quarter is exceeding expectations, with solid performance in most regions.

The results and outlook took shares to a record high of $76.03 earlier in the session.

Tiffany is benefiting from more discretionary spending by upper-end consumers, who are buying premium diamond and gold jewelry. The company is also appealing to more middle-range, aspirational consumers, with finely crafted, but less expensive silver products. Still, because of the uncertain U.S. economic environment, lower-end silver jewelry spending "will likely remain challenging for a while," Investor relations chief Mark Aaron said on a conference call with analysts.

Tiffany is also having to take price increases to offset rising diamond and precious metals costs, and the company plans to continue raising prices in various categories and across various countries.

Still, on a worldwide basis, all major jewelry categories posted double-digit percentage sales growth in the quarter, Aaron said.

Tiffany saw its comparable-store sales grow by double-digit percentages all three months of the quarter and "the trend strengthened" as the period progresses, Aaron said. Comparable-store sales at the New York flagship store, for instance, rose 23% on top of a 26% rise the prior year.

The company's international strategy is broadening its appeal and reach. "They are positioning themselves in markets where there is strong potential growth and that bodes well for the company's continued success," said Agata Kaczanowska, retail analyst at IBISWorld, a market research firm.

Tiffany had warned that store closings caused by the Japan earthquake and tsunami would affect earnings by five cents a share. Those stores have since re-opened and Japan sales rose 7% to $123.4 million.

For the quarter ended April 30, Tiffany reported a profit of $81.1 million, or 63 cents a share, up from $64.4 million, or 50 cents, a year earlier. Excluding items, earnings rose to 67 cents from 48 cents. The most-recent quarter included a headquarters relocation charge of 4 cents, while the year-earlier quarter included a 2-cent tax benefit.

Sales jumped 20% to $761 million. Excluding currency changes, they rose 16%. In March, the company projected per-share earnings of 57 cents on an 11% sales increase.

Gross margin rose to 58.3% from 57.8%. Total same-store sales rose 19%, or 15% on a constant-exchange-rate basis.

Every geographic segment saw double-digit sales growth, including a 19% increase in the Americas--which accounted for the bulk of the total--a 37% climb in the Asia-Pacific region and a 25% rise in Europe.

Tiffany raised its full-year earnings estimate to $3.45 to $3.55 a share from its March forecast of $3.35 to $3.45.

Shares were recently trading up 8.2%% to $75.78.

-Melodie Warner contributed to this article

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