Shares of Tiffany & Co. (TIF) lost much of their sheen, falling 14% yesterday, after the company reported disappointing holiday sales and trimmed its fiscal 2014 outlook.
Sales for the holiday period, i.e., for November and December fell 1% to $1.02 billion as against growth of 4% registered last year. However, on a constant currency basis sales improved 3%, while comparable sales (comps) remained flat year over year. Performance varied widely on regional as well as on the categories’ basis. The company also blamed a stronger U.S. dollar for the dismal sales.
Management now envisions fiscal 2014 earnings per share in the range of $4.15 – $4.20 as against earlier projection of $4.20 – $4.30 per share, and reflecting an 11%-13% growth over $3.73 earned in fiscal 2013. The current Zacks Consensus Estimate is pegged at $4.21 per share.
Moreover, the company, which carries a Zacks Rank #3 (Hold), stated that it will maintain a cautious stance in 2015 given the currency headwinds and expects sales and earnings growth to be in low-to-mid single-digits range.
Looking at Tiffany’s regional performances, we observe that the Americas disappointed as sales fell 1% to $544 million with comps also down 1% (on a constant currency basis). This dealt a severe blow to the company as nearly half of its sales come from this region.
Sales in another major market, Japan, also tanked 16% to $113 million with comps declining 8% (on a constant currency basis). Japan is grappling with slowing economy and an aging population.
On the other hand, sales in Europe grew 1% to $133 million with comps rising 4% (on a constant currency basis). The company witnessed robust growth in the Asia Pacific region (mainly from the booming markets of China and Singapore) with sales increasing 7% to $210 million; comps in the region grew 6% (on a constant currency basis). Tiffany registered 14% growth in Other markets as well.
Tiffany seems to be the only exception in this holiday season that has turned out to be a bonanza for most retailers. Most of them have reported solid numbers for November and December as falling crude prices led to a spurt in consumer spending toward the end of the year. Jewelry retailer, Signet Jewelers Ltd. (SIG) posted 3.6% rise in comps while apparel retailers like J. C. Penney Company Inc. (JCP) and Macy's, Inc. (M) posted 3.7% and 2.7% increase in comps, respectively.
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