Qatar-backed Tiffany & Co reports Q4 loss

Charge of $473m in arbitration with The Swatch Group pushed iconic firm into the red

Tiffany & Co., the US luxury jewellery retailer in which the Qatar Investment Authority owns an 8.7 percent stake, reported fourth quarter results that were up on an ongoing basis in spite of the economic environment, but were turned into a loss by an unfavourable arbitration ruling.

The company incurred a net loss for the quarter ended January 31, 2014 (fiscal 2013) of $103.6m, compared to net income of $179.6m in the fourth quarter of fiscal 2012.

The current year fourth quarter included a net charge of $473m pre-tax ($293m after tax) related to an adverse arbitration ruling in favour of The Swatch Group Ltd.

Without the unfavourable arbitration ruling, Tiffany’s quarterly net income would have been $189.8m, up 6 percent over last year’s $179.6m.

Net sales for the quarter of $1.30bn were up 5 percent over last year’s $1.24bn. On a constant-currency basis, sales were up 9 percent and comparable store sales were up 9 percent.

Sales were up in all major geographic regions on a constant-currency basis. Net income for the full year was $181.4m, compared to $416.2m in 2012. Net sales for the year of $4.03bn were up 6 percent over last year’s $3.79bn.

Chairman and chief executive officer Michael J. Kowalski said: “We are proud of our performance this past year. Sales and operating earnings (excluding the arbitration-related charge) rose to record levels. Sales growth was led by fine and statement jewellery, new or expanded jewellery collections including the ATLAS, ZIEGFELD, and HARMONY collections, and continuing strength in our iconic jewellery designs.”

Tiffany & Co. is partially owned by The Qatar Investment Authority who has raised its investment stake in 2012 to 7.8 percent from 5.2 percent. The sovereign wealth fund based in Doha owns now nearly ten million shares.

QIA’s investments include Harrods Group, which Qatar Holdings took control of in 2010 for $2.22bn; a 26 percent stake in British food retailer J. Sainsbury in 2010, and a 12.8 percent stake in French media group Lagardère SCA. It also has a 1.03 percent stake in LVMH (Louis Vuitton Moët Hennessy).

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