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Sydnee Gatewood
Sydnee Gatewood
Articles (674) 

Tiffany & Co.’s Glimmer Fades on Disappointing Same-Store Sales, Outlook

Jeweler beats earnings, revenue expectations

March 16, 2018 | About:

Audrey Hepburn’s favorite jewelry store, Tiffany & Co. (NYSE:TIF), reported fourth-quarter and full-year 2017 results before the opening bell on Friday.

The New York City-based jeweler posted adjusted earnings per share of $1.67, topping Thomas Reuters’ estimates of $1.64. The company said earnings were negatively impacted by a one-time charge related to the U.S. Tax Cuts and Jobs Act.

Quarterly revenue grew 8.5% to $1.33 billion, edging past expectations of $1.31 billion.

For the year, the company posted earnings of $4.13 per share on $4.17 billion in revenue.


Same-store sales, however, were disappointing. Tiffany posted same-store sales growth, on a constant currency basis, of 1% for the quarter. Analysts were expecting a 2.8% increase. The jeweler’s same-store sales for the year were flat compared to 2016.

The disheartening same-store sales growth sent Tiffany’s shares down more than 6% in premarket trading.

CEO Alessandro Bogliolo commented on the company’s performance, emphasizing the need to generate growth in sales, margins and earnings over the long term by increasing investments in “technology, marketing communications, visual merchandising and digital and store presentations.” He cautioned that while these initiatives will hinder pre-tax earnings growth in the near term, they are necessary.

“We have assessed our business and are focused on the following six strategic priorities: Amplifying an evolved brand message; Renewing our product offerings and enhancing in-store presentation; Delivering an exciting omnichannel customer experience; Strengthening our competitive position and leading in key markets; Cultivating a more efficient operating model; and Inspiring an aligned and agile organization to win," he said.

In December, Matt Boss, an analyst at JPMorgan, initiated coverage of Tiffany, giving it a neutral rating and a $103 price target. In a note, he indicated that while he is positive on the stock, the business’ transition and investment road map will take time.

Bogliolo echoed that sentiment.

"We will only be truly satisfied when we create greater excitement for our customers and also generate growth that reflects the full potential of our brand,” Bogliolo said. “The Tiffany & Co. brand is strong and we have a very talented, dedicated and passionate team to pursue these strategic priorities and lead us to success. We are committed to nurturing the exceptional legacy we have been entrusted."

For 2018, Tiffany projects earnings per share between $4.25 and $4.45. Analysts at Thomas Reuters expect $4.37 in earnings per share. Sales are expected to increase in the mid-single digits.

Of the gurus invested in Tiffany, First Eagle Investment (Trades, Portfolio) has the largest position with 3.08% of outstanding shares. Jana Partners (Trades, Portfolio), Charles de Vaulx (Trades, Portfolio), Ron Baron (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Ray Dalio (Trades, Portfolio) and John Hussman (Trades, Portfolio) are also shareholders.

With a market cap of $11.9 billion, Tiffany’s shares were trading around $97.66 on Friday with a price-earnings ratio of 25.37, a price-book ratio of 23.09 and a price-sales ratio of 2.94.

GuruFocus estimates the stock gained 37% in 2017. Year to date, it has fallen 10%.

Disclosure: No positions.

About the author:

Sydnee Gatewood
I am an editorial assistant at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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