Earnings Preview: Tiffany - Analyst Blog

By Zacks Equity Research,

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Tiffany & Company ( TIF ) is slated to report its second-quarter 2012 financial results on August 27, 2012. The current Zacks Consensus Estimate for the quarter stands at 75 cents a share, indicating an estimated year-over-year decrease of about 12.8%. Revenue, as per the Zacks Consensus Estimate, is $887 million.

First-Quarter Recap

Tiffany's quarterly earnings of 64 cents a share, missed the Zacks Consensus Estimate of 69 cents, and dropped from 67 cents earned in the prior-year quarter. Tiffany, which faces stiff competition from Signet Jewelers Limited ( SIG ) and Zale Corporation ( ZLC ), posted net sales of $819.2 million during the quarter, up 8% from the prior-year quarter. Total revenue came ahead of the Zacks Consensus Estimate of $818 million.

Guidance Went Down

Given the weaker-than-expected results and sluggish economic recovery in most of the countries, management trimmed its fiscal 2012 outlook. The company projects earnings in the range of $3.70 to $3.80 per share, down from $3.95 to $4.05 forecasted earlier. Moreover, total net sales are expected to grow in the range of 7% to 8%, down from 10% predicted previously.

Agreement of Estimate Revisions

During the last 30 days, 4 out of 18 estimates have been revised downwards, while none were increased for the upcoming quarter. Moreover, for fiscal 2012 the story remains the same with 5 estimates (out of 19) being revised downwards, while none were revised higher.

In the last seven days, 2 out of 19 estimates have been revised downwards for fiscal 2012, while none were raised.   

Magnitude of Estimate Revisions

The Zacks Consensus Estimate for the quarter remained stable over the last 30 days. For fiscal 2012, estimates decreased 4 cents to $3.63, as analysts expect both revenue and earnings to decline in comparison to the prior year, on account of a sluggish economic recovery in most of the countries and soft demand for jewelry. Moreover, the downward pressure on earnings estimates was also in response to the guidance cut.

Mixed Surprise History

With respect to earnings surprises, Tiffany has beat as well as missed the Zacks Consensus Estimate over the last four quarters in the range of negative 7.3% to positive 22.9%. The average remained at positive 7.5%, indicating that the company has surpassed the Zacks Consensus Estimate by the same magnitude in the trailing four quarters.

Our Recommendation

Currently, the stock holds a Zacks #3 Rank that translates into a short-term 'Hold' rating. However, we maintain a long-term 'Underperform' rating on Tiffany following the lackluster outlook provided for the current fiscal.

SIGNET GRP PLC (SIG): Free Stock Analysis Report
TIFFANY & CO (TIF): Free Stock Analysis Report
ZALE CORP NEW (ZLC): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: SIG , TIF , ZLC

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