News Archive

Tiffany’s sales, profit beat on higher tourist spending in Europe

Luxury jeweler Tiffany Co (TIF.N) reported better-than-expected quarterly sales and profit as it benefited from higher spending by tourists in Europe and growing demand for its Tiffany T line of fashion jewelry.

Shares of the company, which reiterated its full-year earnings forecast, rose as much as 12.6 percent to $96.28 on Wednesday. The stock was among the biggest percentage gainers on the New York Stock Exchange.

Sales in Europe rose 2 percent in the first quarter ended April 30, Tiffany said, attributing the increase to more tourists shopping at its stores as well as strong local demand.

The weaker euro and the pound have made it attractive for foreign tourists to shop in Europe, Mark Aaron, vice president of investor relations said on a conference call.

Between a quarter and a third of Tiffany’s sales in Europe are made to foreign tourists, Aaron told Reuters.

Tiffany has been struggling with a strong dollar, which discourages tourists from spending in its U.S. stores and reduces the value of overseas sales. First-quarter sales were lowered by 6 percent due to currency fluctuations, the company said.

“Some of these are big-ticket items, so when you’re spending $5,000-$10,000 on an item, (a weaker currency) can make a difference,” Edward Jones analyst Brian Yarbrough said, adding that this is helping Tiffany alleviate forex fluctuations.

The company’s results were also boosted by higher demand for its Tiffany T line of fashion jewelry.

Tiffany T, Francesca Amfitheatrof’s first collection after taking over as design director last year, features bracelets, necklaces and rings with a ‘T’ motif priced between $350 and $20,000.

Sales in the Americas region rose 1 percent to $444 million due to higher sales to U.S. customers and growth in Canada and Latin America.

Tiffany said same-store sales fell 2 percent in Europe and 1 percent in the Americas. Analysts on average had expected declines of 11.6 percent in Europe and 4.9 percent in the Americas, according to Consensus Metrix.

Overall comparable sales fell 7 percent, compared with the 9 percent decline analysts had expected.

The company’s net income fell 16.5 percent to $104.9 million, or 81 cents per share, but came in above the 70 cents analysts expected, according to Thomson Reuters I/B/E/S.

Revenue fell 5 percent to $962.4 million, but beat the average analyst estimate of $918.7 million.

The company’s shares were up 11.9 percent at $95.78 in afternoon trading.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Ted Kerr, Sriraj Kalluvila and Don Sebastian)

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CBS CEO said met with Apple to discuss TV deal

RANCHOS PALOS VERDES, Calif CBS Corp (CBS.N) CEO Leslie Moonves met with Apple Inc (AAPL.O) last week to discuss a TV deal, he said at a technology conference Wednesday, and that discussions and negotiations for such a deal are ongoing.

“We will probably do a deal with Apple TV,” Moonves said during an onstage talk at a conference hosted by Re/code, an online-only technology publication, and added that he met last week with Eddy Cue, Apple’s senior vice president of Internet Software and Services.

Moonves said that television is moving away from 200-channel subscription packages as people watch fewer channels. He said he believes Apple will offer a less expensive TV package with fewer channels.

(Reporting By Yasmeen Abutaleb; Editing by Christian Plumb)

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U.S. seeks JPMorgan communications with China’s Quishan in hiring probe: WSJ

WASHINGTON U.S. regulators have subpoenaed JPMorgan Chase Co (JPM.N) for all of its communications related to 35 Chinese officials, including anti-corruption chief Wang Qishan, as part of an ongoing probe into the bank’s hiring practices, the Wall Street Journal reported on Wednesday.

The newspaper, which reviewed a copy of the subpoena, said it was issued by the Securities and Exchange Commission in late April. Citing people familiar with the matter, it said prosecutors at the U.S. Justice Department had also requested information about Wang.

U.S. authorities are investigating the Asian hiring practices of JPMorgan to determine whether the bank gave jobs to Chinese government officials’ children in return for lucrative banking assignments, the newspaper has reported.

(Reporting by Timothy Ahmann; Editing by Susan Heavey)

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McDonald’s to stop reporting monthly same-store sales after June

McDonald’s Corp (MCD.N) said it will stop reporting monthly same-store sales after June, becoming the latest major U.S. retailer to stop reporting the closely watched indicator to gauge overall spending trends and a company’s financial health.

From July, McDonald’s will report only quarterly comparable sales, which newly-appointed chief executive, Steve Easterbrook, said would be a better measure of sales at the world’s biggest restaurant chain.

“Disclosing comparable sales as part of our quarterly reporting is consistent with nearly all retailers and will provide a greater understanding of McDonald’s sales results in the context of the company’s overall financial performance,” Easterbrook said at the Sanford Bernstein analysts’ conference on Wednesday.

Easterbrook, who took over as CEO in March, also said the move would help McDonald’s focus on longer-term actions as part of a plan to turn the fast-food chain into a “modern, progressive burger company”.

Same-store sales at McDonald’s restaurants globally have fallen for 11 straight months through April, prompting the company to announce a turnaround plan, which includes cutting costs, reorganizing business units and selling restaurants to franchisees.

A large number of U.S. retailers have stopped reporting monthly same-store sales in recent years, including the world’s largest retailer Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N) and Starbucks Corp (SBUX.O).

McDonald’s last monthly same-store sales report will be for June and will be issued along with its second-quarter results, expected some time in July.

The company’s shares were up 0.4 percent at $98.90 in morning trading on the New York Stock Exchange.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Savio D’Souza)

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Etihad Airways says it will add $6.2 billion to U.S. economy by 2020

DUBAI Abu Dhabi’s Etihad Airway’s contribution to the U.S. economy will almost double to $6.2 billion by 2020, it said on Wednesday, in an apparent counter to allegations that government subsidies gave it an unfair edge over competition.

The airline will support the American economy with 23,400 jobs and $2.9 billion in 2015, according to research by Oxford Economics, Etihad said in a statement.

Both of the figures will nearly double by 2020 as Etihad increases operating expenditure and capital investment.

Etihad said the study assessed its capital expenditure with U.S. suppliers and its operating expenditure, as well the impact of passengers it brought into the country.

Three U.S. airlines – Delta (DAL.N), United and American, earlier this year launched a campaign, asking for their Open Skies pact with Gulf carriers to be altered.

In a lengthy report, the airlines accused Etihad, Emirates [EMIRA.UL] and Qatar Airways of taking $40 billion in government subsidies, allowing them to lower prices and push U.S. competitors out of certain markets.

“Open Skies is good for competition and good for the consumer, but most of all today’s report shows it is also good for the American economy,” Vijay Poonoosamy, vice president of international and public affairs at Etihad said.

While denying these accusations, Etihad compiled a report in reply, saying the three U.S. airlines had received $70 billion in government support since 2000, largely through bankruptcy protection and pension guarantees.

The carrier has said it will compile an official reply by the end of May.

Etihad maintains it has received equity and loans from its sole shareholder, the government of Abu Dhabi.

(Reporting by Nadia Saleem, editing by David Evans)

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EU outlines plans to make multinationals pay their share of tax

BRUSSELS The European Commission outlined plans on Wednesday to limit how much multinational companies can reduce taxes on their European earnings through the use of creative accounting.

The Commission, set to detail proposed tax measures on June 17, had already determined in March that European Union countries would have to share information on tax deals agreed with major corporations.

“We agreed on the need to combat tax avoidance by re-establishing the link between taxation and where the company actually does business,” Commission Vice President Valdis Dombrovskis told a news conference after a meeting of commissioners.

Dombrovskis said the Commission aimed to revive a 2011 proposal for a common consolidated corporate tax base (CCCTB), a single set of rules that companies operating in the European Union could use to calculate taxable profits.

Under that proposal, companies would have to comply with just one EU system for computing its tax liabilities, rather than different rules in each member state, and would only have to file a single tax return for the whole of their EU activity.

Dombrovskis acknowledged that consolidation of tax bases across borders would not be easy. Member states would need to agree on how to distribute tax revenues, something they have failed to do to date.

The commissioner said any CCCTB system would have to be compulsory, with those involved in aggressive tax planning unlikely to opt in, but recognised a consensus would have to be reached.

“It has to be an ambitious and also a realistic approach, realistic in the sense that it needs unanimous approval in the Council, so getting support of all EU states,” he said.

The European Conservatives and Reformists group in parliament, which includes Britain’s ruling Conservatives, said it opposed a common EU-wide corporate tax base, which it believed would act as a prelude to harmonised tax rates.

The Commission’s measures are designed to prevent aggressive tax planning by multinationals, such as artificially shifting profits to the country were the rates are lowest or securing beneficial tax rulings, such as those exposed in the “LuxLeaks” disclosures.

(Reporting By Philip Blenkinsop; Editing by Larry King)

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Global lower rate environment harmful to investors: BlackRock CEO

Lowering interest rates around the world to boost the global economy has reached a point where it is now “quite harmful” to clients, including pension funds and insurers, BlackRock Inc (BLK.N) Chairman and Chief Executive Officer Laurence Fink said on Wednesday.

The “low rate environment is having a profound impact on how they’re going to operate,” Fink said at the Annual Bernstein Strategic Decisions Conference on Wednesday.

(Reporting by Ashley Lau in New York; Editing by Jeffrey Benkoe)

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Airbus CEO says A400M problems should not affect 2015 guidance

PARIS The head of Airbus Group (AIR.PA) sought on Wednesday to reassure investors over the impact of a recent crash of the A400M military transporter, saying its subsequent partial grounding should not disrupt 2015 financial forecasts.

Chief Executive Tom Enders also said he was confident about the prospect for plane orders at the upcoming Paris Airshow, but added that neither Airbus nor its U.S. rival Boeing (BA.N) were likely to repeat very strong 2014 sales performances.

On the helicopter market, where Airbus is the world’s largest non-military supplier, Enders said conditions were not improving as quickly as the company had expected due to the dampening effect of lower oil prices on energy industry demand.

(Reporting by Tim Hepher; editing by Michel Rose)

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Altice owner says wasn’t ready for Time Warner Cable deal

PARIS Patrick Drahi, the billionaire owner of European telecoms group Altice, said he didn’t bid for Time Warner Cable because his company lacked management resources to digest such a big deal in a market it had only recently entered.

“I didn’t follow up on the exchanges we had on Time Warner Cable (TWC) that were mentioned in the media because we were not ready,” Drahi told a French parliamentary hearing on Wednesday.

The 51-year-old Franco-Israeli businessman met with TWC chief executive Robert Marcus last week, but decided not to move ahead despite having lined up French and foreign banks willing to finance the deal.

Instead, U.S. number three cable group Charter Communications, backed by Drahi’s mentor turned rival, cable tycoon John Malone, agreed on Tuesday to buy number two TWC for $56 billion.

Drahi defended his decision saying the previously announced purchase of U.S. regional cable firm Suddenlink Communications for $9.1 billion was a “modest” way for Altice to enter the U.S. market and test its ability there.

A deal for TWC would have been a step too far, too fast, Drahi said, quadrupling the number of U.S. employees of Altice companies to nearly 120,000 in a market it barely knew.

“Time is on our side” for the U.S. expansion, Drahi said.

“The two leaders Comcast and Charter will not be able to buy anything else because of their size so we will have an open boulevard ahead of us … If I buy five small operators, I can be as big as Time Warner Cable.”

The profitable and growing U.S. cable market is being reshaped by deals. Companies are seeking to face the challenge of so-called cord-cutters, customers who no longer want to pay for expensive cable packages and prefer to just buy fast broadband service, as well as the rise of streaming services such as Netflix.

Drahi has set a goal for Altice to one day earn half of its revenue in the United States, aiming to diversify risk rather than bet all on Europe.

After buying Suddenlink, the seventh-biggest cable group in the United States, Altice will earn 12 percent of revenue from that market, with the rest coming from telecom and cable assets in France, Israel, Portugal and the Dominican Republic.

Analysts say among possible targets for Altice are Cox Communications, the fourth-largest U.S. cable group, which is in private hands; publicly traded, fifth-placed Cablevision; or privately held eighth-placed Mediacom.

Asked whether such companies are less attractive than TWC because they are smaller and less profitable, Drahi responded: “Even better, that means we will have room to improve them.”

Asked about Cablevision, Drahi said he was not put off by the fact the operator, which is present in New York, New Jersey and Connecticut, faced direct competition from Verizon’s fibre product FiOS on much of its territory. “It’s good actually since it means they know how to compete,” he countered.

In a 36-billion-euro deal spree in the past 18 months, Altice has bought telecom and cable companies which it sees as poorly managed or undervalued, then parachuted in a small team of executives to slash costs and quickly improve profitability.

Drahi, who trained as an engineer, also ploughs money into network upgrades to attract higher-end customers willing to pay for better service.

The cost-cutting has started to pay off at French mobile carrier SFR, which Altice bought last year via French subsidiary cable group Numericable.

But the company’s 4G mobile network still lags rivals, something Drahi blamed on previous owner Vivendi’s chronic underinvestment, and which he promised to fix by the end of the year with a big boost in capital spending.

Altice shares were down 2.6 percent at 119.45 euro at 1302 GMT in a European telecoms index up 0.4 percent. Its shares have more than quadrupled since going public in early 2014.

(Editing by James Regan and Mark Potter)

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