Tiffany & Co. rose the most in more than three months after improving sales in China and Japan signaled that the worst of the global luxury market’s downturn may be over.
Better-than-expected earnings followed upbeat reports from LVMH and Kering SA, the owner of Gucci. Still, not everyone in the industry is optimistic. Richemont, the maker of Cartier jewelry, reported a 51 percent drop in first-half profit this month, and Swiss watch exports are suffering their worst slide in seven years.
Tiffany had been contending with weaker spending in Asia and slower tourism after terrorist attacks in Paris. The jeweler responded by introducing more products and trying to keep its costs and inventory in check.
“The results are definitely better,” said Seema Shah, an analyst at Bloomberg Intelligence. “It’s a good sign.”
The shares climbed as much as 8 percent to $84.40 in New York, the biggest intraday gain since Aug. 25. Tiffany had advanced 2.4 percent this year through Monday.
Earnings were 76 cents a share in the period ended Oct. 31, the New York-based company said in a statement Tuesday. Analysts projected 68 cents, on average. Tiffany maintained its forecast that earnings per share would decline by a mid-single-digit percentage this year and that global net sales would fall by a low-single-digit percentage.
While earnings have improved, Tiffany is remaining cautious because of “highly volatile” global economies and the increased security around New York’s Trump Tower, which may hurt the company’s adjacent Fifth Avenue store, Chief Financial Officer Mark Erceg said on a conference call. Next year’s elections in Hong Kong, one of Tiffany’s largest markets, also may weigh on tourism and spending, he said.
No Conclusion
“We’d like to see several quarters of sales acceleration before making any conclusion about turning global luxury spending,” Erceg said.
Revenue rose 1.2 percent to $949.3 million last quarter, topping analysts’ $922.6 million average estimate. Sales at the company’s stores open for more than 12 months fell 3 percent on a constant-currency basis. Analysts had projected sales by that measure would slip 4.1 percent.