Tiffany holiday sales weaken; Zale, Signet rise

(Reuters) - Tiffany & Co sales over the holiday season weakened markedly in the United States and Europe, prompting the upscale jeweler to lower its full-year profit forecast and sending its shares down nearly 8 percent in premarket trading.

Jewelry chains catering to middle-income U.S. shoppers fared better during the Christmas period, which accounts for about 30 percent of annual jewelry sales.

Signet Jewelers Ltd reported holiday sales at its U.S. stores open at least a year rose 9.2 percent, with gains of about 10 percent at its Kay Jewelers and its higher-end Jared chain.

Zale Corp continued to see improvement, with same-store sales up 9 percent in the United States at its Zales and Gordon's chains.

For November and December, Tiffany's net worldwide sales rose 7 percent to $952 million, a slower pace of growth than last year's 11 percent clip.

Chief Executive Michael Kowalski noted "restrained spending by consumers for fine jewelry" in the United States and Europe.

Tiffany said it expects to earn $3.60 to $3.65 per share for the year ending January 31, down from its earlier forecast of $3.70 to $3.80.

Tiffany sales rose most sharply in Asia, excluding Japan, soaring 19 percent to $165 million. In North and South America, sales at stores open at least a year rose 2 percent, hurt by a 1 percent decline at Tiffany's flagship store on Manhattan's Fifth Avenue.

The holiday sales softness in Western markets follows a warning by Kowalski in November of "recent sales weaknesses."

In October, the New York state comptroller said Wall Street bonuses were likely to drop for a second straight year in 2011 and that there would be layoffs in the financial industry in 2012, prompting speculation that sales of luxury goods would suffer.

But other luxury retailers such as Saks Inc and Nordstrom Inc reported strong holiday sales. High-end shoppers typically pull back on expensive jewelry before they start skimping on their wardrobes.

Signet Jewelers said it expects to earn between $3.67 and $3.72 per share for the fiscal year ending January 31. That is below analysts' average forecast of $3.73, according to Thomson Reuters I/B/E/S.

Signet, which gets 80 percent of its sales in the United States, said same-store sales rose 1.8 percent at its British chains over the holidays. It said it expects gross profit margin to improve in fiscal 2012.

Companywide, Zale, which gets 17 percent of its revenue from its Canadian chains, said same-store holiday sales were up 5.9 percent.

Tiffany shares were down $5.19 to $61.75 in premarket trading, while Signet shares were down 2.8 percent to $45.71.

(Reporting By Phil Wahba; Editing by John Wallace)