It seems as of now that
Tiffany & Company
) stake is at an unfavorable position as the challenging economic
condition is taking away the sheen from this jewelry retailer.
This is quite apparent from its lackluster performance for the
fourth consecutive quarter and the lowered fiscal 2012
Sluggish Sales Trend
Tiffany's global net sales in the third quarter of fiscal 2012
rose 4%, following an increase of 2% in the second quarter, and
8% for both first-quarter fiscal 2012 and fourth-quarter fiscal
2011. From this perspective, it appears that sales growth rate
has increased sequentially, but it has fallen to low-single
digits from the high-single digit range.
Moreover, if we look back at the sales growth in the first
three quarters of fiscal 2011, the story is much clearer. Total
sales in the third, second and first quarters of fiscal 2011
enjoyed double-digit growth, increasing 21%, 30% and 20%,
Bottom-Line Missing Zacks Estimate
Tiffany continues to disappoint with its bottom line results.
The company's third-quarter 2012 bottom-line performance mirrored
the results of the second and first quarters of fiscal 2012, and
fourth quarter of fiscal 2011.
Third-quarter earnings of 49 cents a share fell way behind the
Zacks Consensus Estimate of 63 cents, and dropped sharply from 70
cents earned in the prior-year quarter. The disappointing result
was due to shriveled gross margin and higher tax rate, apart from
difficult year-over-year comparisons.
The company's second-quarter earnings of 72 cents a share had
missed the Zacks Consensus Estimate by a couple of cents, and
dropped sharply from 86 cents earned in the prior-year quarter.
First-quarter 2012 earnings of 64 cents a share came below the
Zacks Consensus Estimate of 69 cents, and dropped from 67 cents
delivered in the prior-year quarter. With regard to the
fourth-quarter 2011 performance, earnings of $1.39 per share fell
short of the Zacks Consensus Estimate of $1.42, and dropped from
$1.44 posted in the prior-year quarter.
The earnings lagged the Zacks Consensus Estimates by 22.2%,
2.7% and 7.3% in the third, second and first quarters of fiscal
2012, respectively, and by 2.1% in the fourth quarter of
Given the weaker-than-expected third quarter results and
sluggish economic recovery in most of the countries, management
trimmed its fiscal 2012 outlook for the third time in a row. The
company now projects earnings in the range of $3.20 to $3.40 per
share, down from $3.55 to $3.70 forecasted earlier.
Tiffany now expects total net sales growth of 5% to 6% for
fiscal 2012, down from the 6% to 7% increase predicted
previously. Operating margin for the year is also expected to
contract. Moreover, gross margin in the fourth quarter is
expected to be lower than the prior-year quarter.
Downslide in Estimates
Following Tiffany's third quarter results, the Zacks Consensus
Estimates have been portraying a downward trend.
The Zacks Consensus Estimate for the fourth quarter of fiscal
2012 dropped by 12 cents to $1.47 per share in the last 7 days.
For the first quarter of fiscal 2013, the estimate fell 4 cents
to 70 cents. For fiscal 2012 and 2013, the Zacks Consensus
Estimates slid 32 cents and 30 cents to $3.27 and $3.80,
respectively, over the same time frame.
We will have to wait and watch as to how the story unfolds in
the fourth quarter. Currently, we maintain our long-term
"Underperform" recommendation on the stock. Moreover, Tiffany,
which faces stiff competition from
Signet Jewelers Limited
), holds a Zacks #4 Rank that translates into a short-term "Sell"
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TIFFANY & CO (TIF): Free Stock Analysis
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