Tiffany Earnings, Revenues Hit by Asian Slowdown; Forecast Softens

Retail

Published: November 25, 2014 7:42 am

Last Updated: April 28, 2020 7:41 am

Tiffany & Co. (NYSE: TIF) reported third-quarter 2014 results before markets opened Tuesday morning. The luxury goods company posted adjusted diluted earnings per share (EPS) of $0.76 on revenues of $960 million. In the same period a year ago, Tiffany reported adjusted EPS of $0.73 on revenue of $911 million. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.77 and $968.86 million in revenue.

Worldwide same-store sales rose 6%, including a jump of 11% in the Americas and 2% in Europe, and declines of 3% in Asia-Pacific, and 6% in Japan. The drop in Japan followed a second-quarter drop of 13%. Japan sales rose 20% in the first quarter of this year, ahead of a consumption tax that took effect on April 1st.

Net sales rose 5% year over year but net profits were down 60% on a GAAP basis in the third quarter as the company took a $0.47 per share charge related to early payment of long-term debt.

Full-year EPS guidance was reiterated at $4.20 to $4.30, excluding the debt-extinguishment charge in the third quarter. The estimate is based on net sales rising in the mid- to high-single-digits, opening 10 new stores and closing 2 others, and free cash flow of at least $400 million, among other assumptions. The estimate of new sales is changed from last quarter when Tiffany said it expected full-year net sales to rise by the high-single digits.

The consensus full-year estimates call for EPS of $4.34 on revenues of $4.36 billion. For the fourth quarter, the consensus estimates are EPS of $1.65 and revenues of $1.39 billion.

Third-quarter gross margin slipped slightly sequentially from 59.9% to 59.5% and operating margins slipped from 21% to 17.6%. In the fourth quarter of 2013, Tiffany’s gross margin was 60.5% and it has been lower in every subsequent quarter, although in the first and second quarters of this year it improved year over year.

The CEO said:

We were pleased with overall sales performance, especially in light of economic and geopolitical challenges around the world.

Investors are likely to react indifferently to Tiffany’s third-quarter results. Earnings and revenues were light and the forecast is a little weaker, but the company could bust a big holiday season and fourth quarter. If Tiffany turns in a fourth quarter like this one, however, the stock will likely get a beating.

Shares are down about 0.1% in pre-market trading Tuesday morning, at $104.87 in a 52-week range of $80.38 to $105.66. Thomson Reuters had a consensus analyst price target of around $107.50 before today’s results were announced.

ALSO READ: America’s Richest Cities

Travel Cards Are Getting Too Good To Ignore (sponsored)

Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.

We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.

It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.

We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.