Jewelry web blog

High-end jewelry retailer tiffany & Co. Friday posted sharply lower profit and sales tiffany for its latest quarter, but said sales trends are improving and raised its earnings outlook.

Another luxury-goods maker, Hermes International SCA, reported modestly higher first-half revenue, though its finance chief said there is “no change in trend emerging.” CFO Mireille Maury, in an interview, said there has been a pickup in orders for perfume, but not for watches and tableware.

Tiffany’s fiscal second-quarter earnings fell 30% to $56.8 million, or 46 cents a share, in the quarter ended July 31, from $80.8 million a year earlier.

Sales at the 172-year-old jewelry chain, known for its iconic blue boxes, fell 16% from the year-earlier quarter to $612.5 million with the steepest declines coming in the U.S. Sales at U.S. stores open at least a year were down 27%. Sales at Tiffany’s flagship store in New York plunged 30%.

On a conference call Friday, Tiffany executives said they see declines in sales at U.S. stores Money Clip open at least a year lessening, to the “high-teens” and a “mid-teen” decline in sales in the Americas for the full year.

The jewelry retailer’s sales are holding up better in Europe and Asia, where the company is projecting low-single-digit percentage declines for the year.

“Our geographical diversification is a significant advantage,” said Mark Aaron, a Tiffany vice president.

In the latest quarter, the greatest declines were for items priced at $50,000 and up, and the smallest declines at lower price points, it said.

Tiffany, which like other retailers has been trying to rein in its inventory, raised its forecast for the full year, to earnings of between $1.65 and $1.75 a share on a world-wide sales decline of 10%. It had previously forecast between $1.50 and $1.60 a share on an 11% sales decline. Last year Tiffany earned $1.74 a share on sales of $2.86 billion.

“It appears to us that the tide may be slowly turning in our favor,” Mr. Aaron said. Its shares rose 11% to $37.57 in 4 p.m. New York Stock Exchange trading.

Paris-based Hermes said its sales for the six months ended 30 June rose 7.6% to 874.9 million euros ($1.26 billion). The maker of high-end scarves and Birkin handbags logged sales gains in all regions except Japan, where they dropped 4%.

The company’s profit dropped to 125.4 million euros from 134.9 million euros a year earlier. It pendants blamed the drop on currency fluctuations and a lower rate of return on financial investments.

With scarf sales holding strong despite the financial crisis, the company said it will continue to invest for the rest of 2009, opening or renovating at least 10 stores, mostly in Asia and the U.S. It opened five new stores in the first half. Hermes maintained its prediction for steady full-year sales and a “slight” drop in profit.