Qatar-backed Tiffany & Co reports strong Q1 results

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Tiffany & Co., the US luxury jewellery retailer in which the Qatar Investment Authority owns an 8.7 percent stake, has raised its full-year profit forecast after it reported better-than-expected quarterly results as new collections drove sales in the United States, its biggest market.

Shares of Tiffany, known for its blue boxes and its Fifth Avenue flagship store in Manhattan, rose as much as 10 percent on Wednesday morning, making the stock one of the top percentage gainers on the New York Stock Exchange.

Tiffany has been struggling for the past two years to find the right balance between the pricey jewellery for which it is known and cheaper silver items that generate a quarter of sales.

Edward Jones analyst Brian Yarbrough said Tiffany's US business had lagged other regions for several quarters, mainly as it was weak in lower-priced silver jewellery category.

"Strength in fine and statement jewellery sales continued, while sales of our new or expanded jewellery collections accelerated, led by our ATLAS collection," Chief Executive Michael Kowalski said in a statement.

Tiffany's fine jewellery is priced a few thousand dollars, while statement jewellery pieces can go as high as $50,000 and above.

The Atlas Collection is a new range that focuses on silver jewellery - including lariats, rings and pendants - priced below $500. Tiffany's profit margin in these pieces is higher than in expensive jewellery.

The company's Fifth Avenue store, which accounts for 8 percent of its overall sales, has benefited as more tourists visit the marquee store and spend more on jewellery.

International visitors to the United States spent $15.4bn in March, according to the US Department of Commerce.

Yarbrough said Tiffany was now seeing broad-based strength in the country, whereas growth earlier was led by its Fifth Avenue store.

"They're gaining acceptance outside of just tourists," he said.

Tiffany, which is usually cautious in its outlook, said earnings would be flat in the current quarter.

The company raised its earnings forecast for the year ending January 31 to $4.15-$4.25 per share from $4.05-$4.15 per share.

Comparable-store sales in the Americas, which account for nearly half of Tiffany's overall sales, rose 8 percent excluding currency fluctuations in the first quarter ended April 30.

Net profit rose 50 percent to $125.6 million, or 97 cents per share, while total sales rose 15 percent to $1bn on a constant-currency basis.

Analysts on average had expected a profit of 78 cents per share on sales of $956.3 million, according to Thomson Reuters I/B/E/S.

Company-wide sales at stores open at least a year rose 11 percent on a constant-currency basis in the first quarter.

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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