Tiffany Earnings Fail to Live Up to Expectations

Tiffany & Co. (NYSE: TIF) released its fiscal third-quarter earnings report before the markets opened on Tuesday. The company had $0.70 in earnings per share (EPS) on $938 million in revenue compared to Thomson Reuters consensus estimates that call for $0.75 in EPS on $971.00 million in revenue. The same period from the previous year had $0.76 in EPS on $959.59 million in revenue.

Worldwide net sales on a constant-exchange-rate basis rose 4% and comparable store sales increased 1% due to growth in Japan, Europe and Asia-Pacific partly but offset by lower sales in the Americas.

In terms of guidance, the company expects more negative effects from the strong U.S. dollar to impact sales later in the fiscal year. Tiffany expects the fiscal year’s EPS to be 5%-to-10% below last year’s $4.20. At the same time, the consensus estimate calls for $4.04 in EPS.

During the third quarter, Tiffany repurchased roughly $60 million in shares leaving approximately $157 million in the repurchase authorization.

Frederic Cumenal, CEO of Tiffany, commented on earnings:

As expected, the strong U.S. dollar continued to put pressure on our financial results, specifically from the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S. In addition, we believe that volatile, uncertain economic and market conditions in the U.S. and other regions are affecting consumer spending, causing us to maintain a cautious near-term outlook. However, focusing on what we can control, we’re pleased with our progress this year in expanding our store base and introducing and communicating compelling new product designs. And we are focused on efforts to manage our operations and inventories more efficiently to enhance cash flow. We are well prepared to delight our customers as they celebrate this holiday season, and our management team’s longer-term strategy continues to call for further strengthening Tiffany’s solid position among global luxury brands, which we believe will ultimately drive improved financial results.

On the books, cash, equivalents, and short-term investments totaled $725 million at the end of this quarter up from $383 million a year ago.

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Shares of Tiffany closed Monday up nearly 2% at $76.55, with a consensus analyst price target of $97.25 and a 52-week trading range of $73.09 to $110.60. Following the release of the earnings report, shares were down 4% at $73.51.