The U.S. luxury jewelery and specialty retailer Tiffany and Co. (TIF, Financial) recorded seventh straight quarter of positive earnings, when it reported fourth quarter earnings. During the quarter, the company saw a 3% rise in comps or a 1% rise on constant-exchange-rate basis. However, the comps growth wasn’t in line with Wall Street’s expectations of 4.7%, or 2.7% on a constant-exchange-rate basis.
Diving into the number
The company’s revenue came in at $1.33 billion, up 9% year over year. Quarterly earnings stood at $1.67 per share, which was 4 cents higher than estimation. As a matter of fact, the company posted net income of $62 million or 50 cents per share, down from $157.8 million or $1.26 per share reported a year ago.
At the end of the fourth quarter, the company had cash and cash equivalents as well as short-term investments of $1,291.2 million while balance of its total long-term debt was $882.9 million. During the quarter, the company repurchased roughly 4, 00,000 shares at an average cost of $99 per share.
Revenue and comps across the globe
In the U.S., the company’s sales improved 5% to $619 million and comps increased by the same percentage. In Europe, the company saw sales gain of 13% year over year to $165 million. Comps in the same region surged 1%. In the Asia-Pacific region, sales amounted to $320 million, up 13% from the same period last year. Also, comps in that region soared 3% year over year. Sales in the other regions came in at $41 million, which represent a 48% gain. Comps grew 6%. Alessandro Bogliolo, Tiffany’s CEO, commented:
"We are pleased to be finishing the year with solid sales growth, both geographically and across product categories. Most important, however, is to generate sustainable growth in sales, margins and earnings over the long-term. Confirming what we recently indicated, we believe that increasing investment now in certain areas, such as technology, marketing communications, visual merchandising, digital and store presentations, which we expect will hinder pre-tax earnings growth in the near-term, is needed to generate that lasting long-term growth."
Outlook
As far as this year is concerned, the designer and retailer of fine jewellery expect capital spending of $282 million. The company also expects to make $380 million of free cash flow. The company sees low-to-mid-single-digit comps growth this year along with lower operating margin. Tiffany projects annual profit between $4.25 and $4.45 per share while analysts estimate the same to be $4.37 per share.
Disclosure: I do not hold any position in the stock mentioned in this article.
