Tiffany & Co. (TIF) Reports Weak Holiday Sales, Revises Guidance

Shares of Tiffany & Co. (TIF) were trading down -1.65 or -2.44 percent to $66.00 per share in Tuesday’s premarket after the company reported its sales results for the two-month holiday season ending on December 31st. Tiffany & Co. stock closed at $67.65 per share, up +0.79 or +1.18 percent in Friday’s regular trading session.

Founded in 1837, New York City based Tiffany & Co. 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 & Co. reported early this morning that its holiday season sales had fallen six percent for the two month period ending at year’s end. The company said that the main factors contributing to the weak sales were the strong U.S. Dollar and the reluctance of foreign tourists to the United States spending in their stores.

On a constant exchange rate basis, which excludes the effect of currency translation into U.S. Dollars, Tiffany & Co. reported a decline of three percent to worldwide net sales. The drop was attributed to lower sales in the America’s and Asia Pacific that was offset by better numbers from Europe and Japan.

Comparable store sales for stores open at least one year were off five percent with no noteworthy changes in the performance of jewelry categories. The company reported worldwide net sales for the two months of $961 million, a six percent decline from the same period one year ago.

Tiffany’s Chief Executive Officer, Frederic Cumenal said in the company’s press release that, “In the holiday period, we continued to feel pressure from the strong U.S. dollar on the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S., which we expect will continue into 2016. We believe overall sales results were negatively affected by restrained consumer spending tied to challenging and uncertain global economic conditions and we expect 2015 earnings to come in at the low end of our previously-set range of expectations. Nonetheless, we were pleased with initial sales of our new fashion and fine jewelry designs, a solid increase in worldwide e-commerce sales and our ability to maintain gross margin at normal levels.”

Tiffany’s & Co. also cut its guidance for the full year, which it had previously forecast to decline -5 to -10 percent, is now expected to show a decline of -10 percent from the previous year’s $4.20 per diluted share. In addition to a debt extinguishment charge in 2014 and a loan impairment charge in the second quarter of 2015, the company said it would record a charge of approximately four cents per diluted share for “staff and occupancy” reductions, suggesting the company would be laying off workers and possibly closing stores.

Tiffany’s is scheduled to report its fourth quarter and full year results on March 18th before the market open. The earnings release will be followed by a conference call and question and answer session with management

Tiffany’s stock is trading just above its yearly low of $65.09 per share. This morning’s news has already made the stock test that level in the premarket. Given the company’s sales and the overall market weakness, the stock could extend its losses significantly.

Other News About TIF

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Why Tiffany & Co. Stock Sank 29% Lower in 2015

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Published on Jan 19, 2016
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 2016. Content published with author's permission.

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