Tiffany stock outperformed peers
Jewelry retailers are witnessing soft top-line growth. A slow sales growth rate can be attributed to weak store traffic, especially in the United States (SPY). It can also be due to a decline in tourist spending, increased competition from low-priced fashion jewelry, and adverse currency movements. However, Tiffany (TIF) has managed to report sales growth, although at a slower rate, despite industry-wide challenges. The company generated higher margins and posted improved bottom-line results in the past quarter, which is reflected in its YTD (year-to-date) stock price movement.
Tiffany stock has risen 13.7% on a YTD basis as of August 18, 2017. The company has outperformed Signet Jewelers (SIG) as well as the S&P 500 Index (SPX-INDEX) in terms of price appreciation. During the same period, Signet stock fell 43.1%, while the S&P 500 rose 8.3%.
Going forward, Tiffany projects its sales and EPS (earnings per share) to improve in fiscal 2017. It’s relying on new designs in the fast-growing fashion jewelry segment. Meanwhile, Tiffany will launch luxury accessories and new signature fragrances for women, which are projected to supplement its top-line growth rate.
An anticipated decline in input costs and higher productivity savings is expected to boost the company’s profitability growth.
In comparison, Signet is supposed to report sluggish sales and EPS. Its top line is expected to decline as weak mall traffic and higher competition are likely to take a toll on its performance. Increased promotional spending to attract shoppers will further pressure its margins and, in turn, its bottom line.
Tiffany will report its fiscal 2Q17 earnings on August 24, 2017. In this series, we’ll focus on analysts’ expectations for sales and EPS. We’ll also look at analysts’ recommendations and valuations for TIF stock.