Tiffany (TIF) Stock Rallies on Third Quarter Earnings

Shares of Tiffany & Co. (TIF) were trading up +2.18 or +2.08 percent to $107.19 per share in Tuesday's premarket, after the company reported slightly lower than expected third quarter earnings and downwardly revised its outlook for sales for the company's full fiscal year. Tiffany & Co. stock closed at $105.01, up +1.10 or +1.06 percent in Monday's regular trading session.

New York City based Tiffany & Co., founded in 1837 is a U.S. multinational jeweler and luxury retailer.
Through its stores and direct-mail marketing, the company sells jewelry, china, crystal, sterling silver, fragrances, stationary and personal accessories. The company is known for selling luxury goods and has a reputation for its diamond jewelry. Tiffany's flagship store is located at the corner of Fifth Avenue and 57th Street in Manhattan, New York City.

Tiffany reported adjusted diluted earnings of $0.76 per share on $960 million in revenues versus $0.73 on $911 million in the same period one year ago. Analysts were expecting the company to report earnings per share of $0.77 on $969 million in revenue.

While net sales increased 5 percent from last year, profits declined -60 percent on a GAAP basis, due to the company taking a $0.47 per share charge for an early payment of long term debt. Global same store sales increased six percent with an 11 percent increase in the Americas and a two percent increase in Europe.

Nevertheless, the Asia Pacific region reported a same store sales decline of three percent, while Japan showed a decline of six percent. Third quarter gross margin declined a fraction from 59.9 percent to 59.5 percent, while operating margins declined to 17.6 percent from 21 percent. Overall, the company reported same store sales had increased by 3.8 percent in the quarter compared to an analyst consensus of four percent.

In the company's press release, Michael J. Kowalski, Chairman and Chief Executive Officer, said, "We were pleased with overall sales performance, especially in light of economic and geopolitical challenges around the world. We continue to pursue exciting opportunities in marketing, merchandising and store expansion to support longer-term growth, and are especially encouraged with initial results from the recent launch of our TIFFANY T jewelry collection."

The company maintained its previous earnings per share guidance for it full year of $4.20 to $4.30 per share, which excluded the early retirement of debt in the third quarter. The forecast is based on net sales increasing in the mid to high single digits with free cash flow of $400 million. Also in the estimate is the opening of 10 new stores and the closure of two stores.

Net sales were revised lower from the last quarter when the company forecast full year net sales would be in the high single digits. Analysts expected full year earnings per share of $4.34 on $4.36 billion in revenue. For the fourth quarter, analysts expect earnings per share of $1.65 on $1.39 billion in revenue.

This morning's premarket action had Tiffany stock down two percent initially after the news; however the stock recovered and is now two percent higher as of this writing, which is a new yearly high for the stock. Investors are showing their confidence in the stock despite the downward estimate for sales and the slightly lower than expected earnings news.

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Published on Nov 25, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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