Earnings Preview: Tiffany & Company - Analyst Blog

Tiffany & Company (TIF), a high-end jewelry designer, manufacturer and retailer, is scheduled to report its second-quarter 2010 financial results before the bell on Friday, August 27, 2010. The current Zacks Consensus Estimate for the quarter is 53 cents a share.
 
First-Quarter 2010, a Synopsis
 
Tiffany posted stronger-than-expected first-quarter 2010 results buoyed by improved demand for luxury items worldwide. The quarterly earnings of 50 cents a share, excluding one-time items, rose more than twofold from 22 cents delivered in the prior-year quarter, and came well ahead of the Zacks Consensus Estimate of 36 cents.
 
Net sales for the quarter jumped 22% to $633.6 million from the prior-year quarter, signaling the renewed demand for jewelry in the Americas, Asia-Pacific and European regions.
 
Tiffany at its last earnings call had forecast earnings in the range of $2.55 to $2.60 per share for fiscal 2010, up from its previous guidance range of $2.45 to $2.50.
 
Second-Quarter 2010 Consensus
 
Analysts surveyed by Zacks, expect Tiffany to post second-quarter 2010 earnings of 53 cents a share. The current Zacks Consensus Estimate represents a year-over-year growth of 29.3%. The estimates in the current Zacks Consensus for the quarter range from a low of 49 cents to a high of 56 cents.


The current Zacks Consensus Estimate has remained stagnant over the last 30 days; with only one out of 17 analysts covering the stock revising his estimate downward. In the last 7 days too, only one analyst has lowered his forecast with the others keeping their estimates unaltered, leaving the consensus unchanged.
 
Earnings Surprise History
 
With respect to earnings surprises, Tiffany has missed as well as topped the Zacks Consensus Estimate over the last four quarters in the range from negative 4.4% to positive 43.5%. The average remained at positive 24.2%. This suggests that Tiffany has outperformed the Zacks Consensus Estimate by an average of 24.2% in the last four quarters.
 
Tiffany in Neutral Lane
 
Tiffany’s sales were hit hard by the recent economic downturn, when consumers lowered their discretionary spends, but as the recession eased, demand for luxury items improved. The company is well positioned to deliver robust sales and earnings growth. The company also holds a significant position in the world jewelry market and is poised to benefit from its increased geographic reach. The company has also been concentrating more on smaller-sized store formats that offer selected collections of lower-priced, higher-margin products.
 
However, Tiffany’s customers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels, which may negatively impact their discretionary spending, and in turn the company’s growth and profitability.
 
Currently, we prefer to be Neutral on Tiffany. Moreover, the Zacks #3 Rank, which translates into a short-term ‘Hold’ rating, correlates with our long-term recommendation.


 
TIFFANY & CO (TIF): Free Stock Analysis Report
 
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