Tiffany Downgraded to Strong Sell - Analyst Blog

By Zacks Equity Research,

Shutterstock photo

Zacks Investment Research downgraded Tiffany & Company ( TIF ) to a Zacks Rank #5 (Strong Sell) on Jan 9, 2013.

Why the Downgrade?

Tiffany has witnessed sharp downward estimate revisions after reporting soft holiday sales numbers that prompted management to take a conservative stance on its future earnings. Results were at the lower end of management's expectations. It seems that the company is at an unfavorable position as the challenging economy is taking away some of the sheen from this jewelry retailer.

On a constant-currency basis, total worldwide net sales for the two months period ended Dec 31, 2012, marked an increase of 4%, whereas comparable-store sales (comps) remained flat. We observe that the rate of growth of net sales and comps decelerated from 6% and 4%, respectively, registered during the two months period ended Dec. 31, 2011.

When compared to its peer, Zale Corporation ( ZLC ), Tiffany seems to be losing market share as Zale witnessed a 2.3% increase in its comps for the period under review.

Following soft holiday sales, Tiffany expects fiscal 2012 earnings to be at the lower end of the previously provided guidance range of $3.20 to $3.40 per share, when the company posted disappointing third-quarter fiscal 2012 results on Nov 29, 2012. The quarterly earnings of 49 cents a share missed the Zacks Consensus Estimate of 63 cents, and dropped sharply from 70 cents earned in the prior-year quarter.

The Zacks Consensus Estimate for the fourth quarter and fiscal 2012 dropped 3.5% and 1.5%, to $1.37 and $3.21 per share, respectively, over the past 7 days. Moreover, for the first quarter and fiscal 2013, the Zacks Consensus Estimate fell by 4.3% and 5.6% to 67 cents and $3.54 per share, respectively, over the same time frame.

Other Stocks to Consider

Not all jewelry retailers are performing as poorly as Tiffany. Signet Jewelers Limited ( SIG ) is expected to continue with its positive earnings surprise trend, andholds a Zacks Rank #2 (Buy). Other retail stocks that look promising are G-III Apparel Group, Ltd. ( GIII ) and Gildan Activewear Inc. ( GIL ), both of which hold a Zacks Rank #1 (Strong Buy).

G-III APPAREL (GIII): Free Stock Analysis Report

GILDAN ACTVWEAR (GIL): Free Stock Analysis Report

SIGNET GRP PLC (SIG): Free Stock Analysis Report

TIFFANY & CO (TIF): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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 , Stocks
Referenced Stocks: GIII , GIL , SIG , TIF

More from


Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by