U.S. Markets closed

Tiffany's Q2 Earnings Dazzle; Williams-Sonoma Outlook Weak

Tiffany turned heads Wednesday with sparkling earnings. But upscale cookware and home furnishings retailer Williams-Sonoma turned south after the close on so-so results and a weak outlook.

Luxury jeweler Tiffany earned 96 cents a share in Q2, up 16% vs. a year earlier and sailing past forecasts for 85 cents.

Revenue grew 7% to $993 million, excluding the effect of foreign currency translation, ahead of estimates for $987.88 million. Sales at stores open at least a year increased 3% from a year earlier.

Same-store sales rose 8% in the Americas and 7% in Asia-Pacific region excluding Japan. Japan sales comps tumbled 13% as consumers there cut purchases in the wake of the April 1 sales tax hike. European comps slid 8%.

Tiffany (TIF) also raised its EPS forecast for the year ending Jan. 31, by a nickel to $4.20-$4.30. Analysts had expected $4.29, and that was before Q2's 11-cent beat.

Tiffany shares rose 1% to 101.75 after hitting a record 105.67 shortly after the open.

Gross margin jumped to 59.9% as Tiffany saw favorable product costs and raised prices across all product categories and regions.

But while Tiffany suggested good news for luxury goods and retailers, Williams-Sonoma (WSM) results underscored that consumer demand remains uneven at the high end.

The operator of its namesake cookware stores along with Pottery Barn and several other chains earned 53 cents a share in Q2, meeting views for an 8% gain. Revenue rose 6% to $1.04 billion, just a hair short of targets.

Same-store sales rose 5.7%, with Williams-Sonoma comps up 3.4%, Pottery Barn 4.4% and West Elm 16.7%.

But Williams-Sonoma stunned with its outlook, predicting Q3 EPS of 58-63 cents on revenue of $1.10 billion to $1.13 billion. Analysts had seen earnings of 66 cents and $1.13 billion in sales.

The affordable luxury retailer's shares plunged 10% to 67.20% in after-hours action, wiping out its August gains. The stock had closed up 4 cents to 74.89, hitting a new intraday high.

Pricey home furniture chain Restoration Hardware (RH) fell 2.5% late in sympathy.

Other affordable luxury brands have taken a beating.

Michael Kors' (KORS) shares have stumbled for the past six months amid weaker margins, even as the fashion house's sales and earnings growth remain strong.

Movado (MOV) on Tuesday reported disappointing Q2 earnings and sales. The luxury watchmaker's shares fell nearly 5% Wednesday after Tuesday's 8% tumble.