Tiffany's Earnings Miss, Up Y/Y - Analyst Blog


Tiffany & Company ( TIF ) posted fourth-quarter fiscal 2013 adjusted earnings of $1.47 per share that missed the Zacks Consensus Estimate of $1.52 but increased 5% from $1.40 in the prior-year quarter benefiting from higher sales and improved operating margin.

On a reported basis, including one-time items, the company delivered loss of 81 cents a share compared with quarterly earnings of $1.40 in the year-ago period. This designer, manufacturer and retailer of fine jewelry also provided initial earnings outlook for fiscal 2014 that came below analysts' expectation.

Shares of Tiffany tumbled 3.6% to $87.90 during pre-market trading hours.

Let's Unveil the Picture

Tiffany posted net sales of $1,298.3 million during the quarter, up 5% from the prior-year quarter, on the heels of healthy performance of stores in the Americas, Asia-Pacific and Europe regions and due to new collection launches. However, total revenue fell short of the Zacks Consensus Estimate of $1,303 million. In constant currencies, net sales jumped 9%, whereas comparable-store sales climbed 6%.

By geographic segment, sales in the Americas grew 6% to $659 million, while comps rose by an equivalent rate; sales in the Asia-Pacific region climbed 8% to $275 million, whereas comps increased 1%; sales in Japan declined 12% to $169 million and comps dipped 11%; and sales in Europe jumped 10% to $161 million and comps increased 5%. Other sales surged 47% to $35 million.

In constant currencies, sales in the Americas rose 7%, whereas comps grew by a similar rate during the quarter; sales in the Asia-Pacific region grew 11%, whereas comps rose 4%; sales in Japan advanced 8%, while comps also grew by 8%; and sales in Europe climbed 7%, whereas comps rose 2%.

Gross profit for the quarter increased 7% to $785.6 million, while gross margin expanded 140 basis points to 60.5% due to lower product cost and increase in prices. Adjusted operating income jumped 8% to $312.9 million, whereas operating margin increased 60 basis points to 24.1%.

Stores Update

Tiffany opened net 14 outlets during fiscal 2013. The company plans to add 13 stores - 4 in the Americas, 5 in Asia-Pacific, 2 in Japan, and 1 each in Europe and Russia, and has plans to shutter 4 outlets - 1 each in the Americas, Asia-Pacific, Japan and the U.A.E during fiscal 2014.

As of Jan 31, 2014, the company operated 289 stores (121 in the Americas, 72 in Asia-Pacific, 54 in Japan, 37 in Europe and 5 in the U.A.E.).

Other Financial Details

Tiffany ended fiscal 2013 with cash and cash equivalents and short-term investments of $367 million, and total short-term and long-term debt of $1,003.5 million, reflecting 37% of shareholders equity flat with the prior year. Management forecasted capital expenditures of approximately $270 million and expects to generate free cash flow of at least $400 million for fiscal 2014.

The company's Board of Directors also authorized a share repurchase program of $300 million, which is slated to expire on March 31, 2017.

Strolling Through Guidance

Tiffany now projects fiscal 2014 earnings between $4.05 and $4.15 per share. The current Zacks Consensus Estimate for fiscal 2014 is $4.26 per share, which could witness a downward revision in the coming days.

Tiffany now expects total net sales growth in high-single digit percentage for fiscal 2014 both in U.S. dollars and in constant currencies with growth across all regions.

Zacks Rank for Tiffany

Tiffany currently sports a Zacks Rank #3 (Hold). Other better ranked retail stocks that look promising include Zale Corp. ( ZLC ), Hanesbrands Inc. ( HBI ) and Michael Kors Holdings Ltd. ( KORS ), all carrying a Zacks Rank #1 (Strong Buy).

HANESBRANDS INC (HBI): Free Stock Analysis Report

MICHAEL KORS (KORS): Free Stock Analysis Report

TIFFANY & CO (TIF): Free Stock Analysis Report

ZALE CORP NEW (ZLC): Free Stock Analysis Report

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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 , Earnings , Stocks

Referenced Stocks: HBI , KORS , TIF , ZLC

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