Shares in Tiffany & Co.(NYSE:TIF) rose nearly 7.20 percent on Monday after the company held out prospects of its margins improving later in the year.
The jewellery retailer slashed its sales and earnings forecast for the second consecutive quarter but said that margins on its gold and jewellery lines would be better in future quarters.
Tiffany reduced its global net sales growth forecast by 1 percentage point to a range between 6 percent and 7 percent for the year ending in January.
Tiffany lowered its full-year profit outlook to between $3.55 and $3.70 a share from $3.70 to $3.80, in line with Wall Street expectations of $3.64.
Global sales at Tiffany rose 1.6 percent to $886.6 million in the second quarter ended on July 31. Tiffany said it had earned $91.8 million, or 72 cents per share, for the quarter, up from $90 million, or 69 cents per share, a year earlier.
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The results missed Wall Street estimates by a penny a share. Analysts had been expecting a smaller profit because of rising precious metal costs.
Same-store sales dropped 5 percent in the Americas. They also declined 5 percent in the Asia Pacific region that includes China, which has been the fastest-growing market for Western luxury brands.
Sales in Europe got a boost due to favourable currency movements and an influx of Asian tourists who spent heavily at its stores.
Despite its cautious projections for the future, Tiffany is proceeding with the expansion plans that have supported its fast growth in recent years. The chain is now expected to open 28 stores by the end of the year.
Share of TIF made a 3-month high of $63.22 and closed at $62.71.