Earnings Preview: Tiffany & Co. - Analyst Blog

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Tiffany & Company ( TIF ), a high-end jewelry designer, manufacturer and retailer, is slated to report its third-quarter 2011 financial results before the bell on Tuesday, November 29. The current Zacks Consensus Estimate for the quarter is 59 cents a share. The Zacks Consensus estimates revenue at $798 million.

Second-Quarter 2011, a Synopsis

Tiffany posted better-than-expected second-quarter 2011 results buoyed by improved demand for luxury items worldwide and consequently raised its full-year outlook. The quarterly earnings of 86 cents a share surpassed the Zacks Consensus Estimate of 70 cents, and rose substantially from 55 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 $872.7 million during the quarter, up 30% from the prior-year quarter, on the heels of stellar performance of stores in Americas, Asia-Pacific, Japan and European regions, healthy comparable-store sales growth as well as new collection launches.

Total revenue also handily beat the Zacks Consensus Estimate of $787 million. Comparable-store sales climbed 28% in the quarter under review. In constant currencies net sales jumped 24% and comps grew 22%.

Management Guided

At the last earnings call, Tiffany raised its fiscal 2011 earnings guidance on the back of stronger-than-expected second-quarter 2011 results. Management forecasts earnings in the range of $3.65 to $3.75 per share, reflecting a growth of 25% to 28%. Earlier, the company had projected earnings in the range of $3.45 to $3.55 per share.

Third-Quarter 2011 Consensus

The analysts polled by Zacks, expect Tiffany to post third-quarter 2011 earnings of 59 cents a share. The current Zacks Consensus Estimate reflects a growth of 28.3% from the prior-year quarter. The estimates in the current Zacks Consensus for the quarter range from a low of 52 cents to a high of 66 cents.

Zacks Agreement & Magnitude

Of the 17 analysts following the stock, only 1 analyst has revised the estimate upward and none lowered the same in the last 30 days, leaving no material impact on the Zacks Consensus Estimate. In the last 7 days, none of the analysts revisited their estimates, thereby keeping the Zacks Consensus Estimate unchanged at 59 cents.

Positive Earnings Surprise History

With respect to earnings surprises, Tiffany has topped the Zacks Consensus Estimate over the last four quarters in the range of 3.6% to 27.8%. The average remained at 18%. This suggests that Tiffany has beaten the Zacks Consensus Estimate by an average of 18% in the trailing four quarters.

Price Stats

Since its last earnings release on August 26, 2011, Tiffany'smarket price has risen marginally by 0.6% to $69.12 on November 23, 2011. During trading hours on November 23, the stock reached the day low of $69.10 and the day high of $71.56.

The stock price is within the range of the 52-week low-high range of $54.58 attained on March 15, 2011 and $84.49 achieved on July 7, 2011. Over the period from August 26, 2011 to November 23, 2011, the stock dropped to a low of $56.21 on October 4, 2011 and rose to a high of $80.99 on October 27, 2011.

Let's Conclude

The jewelry market was hit hard by the recent global meltdown, which resulted in a shift in focus to cheaper private-label brands, but as the recession eased demand for luxury items also improved. The company holds a significant position in the world jewelry market and is poised to benefit from its increased geographic reach. The company generates nearly half of the total sales internationally. We believe that Tiffany is well positioned to deliver robust sales and earnings growth.

The company is focused on opening smaller stores that offer select collections of lower-priced, higher-margined product, which in turn boosts store productivity. Tiffany concentrates on improving sales per square foot through an increase in customer traffic and converting them into potential buyers by targeted advertising, ongoing sales training and customer-oriented initiatives.

The brand appeal, strategic initiatives and a brighter outlook bolster a sense of confidence in the stock even amid a dwindling economy. But we have to wait and watch as to how the cautious consumers react to the sparkles of Tiffany in the upcoming holiday season. As of now we have a short-term Hold recommendation on the stock, which is well defined through our Zacks #3 Rank. However, we maintain our long-term Outperform recommendation on Tiffany.


 
SIGNET GRP PLC ( SIG ): Free Stock Analysis Report
 
TIFFANY & CO ( TIF ): Free Stock Analysis Report
 
ZALE CORP NEW ( ZLC ): Free Stock Analysis Report
 
Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: SIG , TIF , ZLC

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