Bad Era for Investors

Few American companies have a better pedigree than Tiffany jewelry. Even the wooden and glass counter-tops in the jewelry's store on New York's Fifth Avenue date from the turn of the century. Yet since it was bought by its managers a decade ago and subsequently taken public, Tiffany has gradually started to act less like a New York institution and more like an international business: it now has 79 shops across the world where people can buy new released Tiffany Notes Round earrings. Even so, the firm has too often left its shareholders with the same worn look as Holly Golightly's cinematic suitors. Is that about to change?
Last year Tiffany increased its sales by 16% to $567m, but still managed to lose $10m, thanks to a $30m charge arising from its Japanese operation. With sales in the first quarter 20% above the equivalent figure in 1993, Wall Street expects the company's underlying profits to rise by almost a third this year. A doubt remains over its foreign-exchange liability: earlier this year Tiffany, betting that the yen would weaken, bought options to sell up to Y4.75 billion ($47.5m)--a mistake that was made much worse by a typographical error which reported the transactions as being ten times that size. Tiffany has now told investors that its losses on the Elsa Peretti Open Wave earrings will amount to no more than $150,000 per quarter.

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