* Store count to rise as much as 8 pct/year
* Operating margins could match record 2007 levels
* Shares down 1.5 percent in late morning trading (Adds details on market share, Japan, byline, updates shares)
By Phil Wahba
NEW YORK, March 24 (Reuters) - Tiffany Co (TIF.N) aims toincrease its store count by as much as 8 percent per year forthe "foreseeable future," and the upscale jeweler"s operatingmargins could again hit all-time highs reached in 2007, ChiefExecutive Michael Kowalski said on Wednesday.
Tiffany, which on Monday reported strong holiday results,can "ultimately double its stores in the U.S. and Europe,"Kowalski said at an investor conference that was broadcast overthe Internet.
The company operated 220 stores worldwide as of Jan. 31,2010 and said on Monday it planned to open another 17 locationsthis year. [ID:nN22185211]
While Tiffany reported a fourth-quarter profit that wasnearly five times greater than a year earlier, the company"smargins took a slight hit because of higher diamond andprecious metals costs.
Its operating profit margins in 2009 were 16.3 percent.Kowalski said that matching an all time high of 19.6 percentreached in 2007, before a financial crisis and recessionseverely curbed the luxury market, was "well within reach" ifits sales growth continues.
Sales at Tiffany stores open at least a year rose 11percent in the United States during the quarter that includedBlack Friday and the Christmas shopping season, which accountsfor about 40 percent of overall jewelry sales.
One trouble spot is Japan, where Tiffany operates 57 storesand where sales fell 9 percent during the holiday quarter.Kowalski said he expects sales there to be weak over thelong-term.
UP FOR GRABS
Kowalski said the distress in the jewelry industry lastyear had left an opening for Tiffany to win market share fromrivals and that his plan to raise marketing spending this yearwas directly aimed at a new set of shoppers.
"There are many orphaned customers out there looking for anew relationship," Kowalski said.
Tiffany and downmarket rivals such as Signet Jewelers Ltd(SIG.N) (SIG.L) and Zale Corp (ZLC.N) have gotten some relieffrom competitive pressures after a number of jewelers,including Fortunoff and Finlay Enterprises, went bankrupt lastyear.
A report by Citigroup, which hosted the investorconference, found that between 5 percent and 10 percent of theU.S. jewelry market was now "up for grabs" following thosebankruptcies.
Tiffany shares were down 70 cents, or 1.5 percent, at$47.06 in morning trading on the New York Stock Exchange.
(Reporting by Phil Wahba, editing by Dave Zimmerman)
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