Tiffany & Co's third-quarter net income fell 30%, stung by a higher than expected tax rate, economic weakness and high precious metal and diamond costs.
The jewellery company's results missed Wall Street's expectations and it also cut its full-year earnings forecast.
For the three months to the end of October 31, the company known for its blue boxes earned $63.2m, or 49 cents per share. That was down from $89.7m, or 70 cents a share, a year earlier.
Analysts had forecast earnings of 63 cents per share.
The company's chairman and CEO Michael J Kowalski said in a statement that Tiffany had expected its quarterly results would be affected by ongoing economic softness and tough year-ago comparisons.
But he added that the retailer's gross margin rate of 54.4% - down from 57.9% the same time last year - was weaker than expected and its tax rate was higher than expected. Gross margin, a key performance metric, is the amount of each dollar in revenue a company actually keeps.
While cautious about worldwide economic conditions, Kowalski said that the company anticipates results improving during the holiday season partly because of easier year-over-year sales comparisons but also because of new stores and new products.
The Christmas season is critical for retailers, as it can make up to 40% of stores' annual revenue.
Tiffany said its revenue increased 4% to $852.7m from $821.8m - Wall Street had expected a figure of $858.8m. Sales rose 6% in Europe and 3% in the Americas region. Asia-Pacific sales climbed 2%, while Japan sales rose slightly.
The company said that its other sales jumped 73% as it converted five shops in the United Arab Emirates from independently-run distribution to company-run stores.
Tiffany said it now expects 2012 earnings of $3.20 to $3.40 a share. Its prior outlook was for earnings of $3.55 to $3.70 per share. It had 272 stores by the end of the third quarter.
