Tiffany (NYSE:TIF) missed analysts' estimates with quarterly same-store sales numbers on Friday and forecast a full-year profit largely below expectations as the jeweler invests heavily to turn its business around.
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The company, which has been marred by several quarters of declining sales, has been taking numerous steps to diversify its revenue by introducing cheaper silver jewelry as well as everyday home items to appeal to a wider customer base.
But the investments are expected to take a toll on the company's earnings, Chief Executive Officer Alessandro Bogliolo said.
"Increasing investment now in certain areas, such as technology, marketing communications, visual merchandising, digital and store presentations ... will hinder pre-tax earnings growth in the near term," Bogliolo said.
Tiffany forecast full-year profit between $4.25 and $4.45 per share, compared with analysts' estimate of $4.37 per share, according to Thomson Reuters.
Same-store sales, on a constantcurrency basis, rose 1% in the reported quarter, missing estimates of a 2.8% rise.
In January, the company reported worldwide same-store sales that rose 5% in November and December, prompting a rise in its full-year profit forecast.
The company's net earnings fell to $61.9 million, or 50 cents per share, in the fourth quarter ended Jan. 31, from $157.8 million, or $1.26 per share, a year earlier.
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Tiffany's profits were also hit by a charge related to recent changes in the U.S. tax code.
Excluding items, the company earned $1.67 per share, beating estimates of $1.64 per share.
The company's net sales rose 8.5% to $1.33 billion, edging past estimates of $1.31 billion.