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Tiffany Profit Tops Estimates as Higher Prices Boost Revenue (3)

May 21 (Bloomberg) -- Tiffany & Co., the world’s second- largest luxury jewelry retailer, posted first-quarter profit that exceeded analysts’ estimates and raised its forecast for the year as price increases helped boost sales.

Net income rose 50 percent to $125.6 million, or 97 cents a share, in the three months ended April 30, from $83.6 million, or 65 cents, a year earlier, the New York-based company said in a statement today. Analysts projected 78 cents, the average of 23 estimates compiled by Bloomberg.

Tiffany said in March that it would increase average prices at a single-digit percentage rate. The company also introduced new products this year, including pieces in its Atlas line, which features designs showcasing Roman numerals. Revenue climbed 13 percent to $1.01 billion, topping analysts’ $956.2 million estimate. Sales at stores open at least a year rose 11 percent, beating analysts’ projection for a 4.8 percent gain.

The sales improvement, which took place in all regions, “suggests strong underlying trends continue to improve,” David Schick, an analyst with Stifel Financial Corp. in Baltimore, wrote in a note to clients today. President Frederic Cumenal’s “new energy and ideas for the business are helping business, too.”

Schick recommends buying the shares.

Profit this year will be as much as $4.25 a share, up from a previous forecast of as much as $4.15, the company said today.

Shares of Tiffany, led by Chief Executive Officer Michael Kowalski, rose 9.1 percent to $96.30 at the close in New York, for the biggest one-day increase since August 2011. The stock gained 3.8 percent this year, compared with a 2.1 percent increase for the Standard & Poor’s 500 Index.

Regional Gains

Revenue gained 8 percent in the Americas, 17 percent in Tiffany’s Asia-Pacific region, 9 percent in Europe and 20 percent in Japan.

Gross margin, or earnings left after subtracting the cost of goods, expanded to 58.2 percent of sales from 56.2 percent a year ago. Analysts estimated 57.1 percent.

Selling, general and administrative expenses rose 4.9 percent to $379.7 million.

Tiffany ranks second to Cie. Financiere Richemont SA in global sales of luxury jewelry.

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