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Persisting Challenges Could Hurt Tiffany Stock


Jun. 4 2019, Published 8:25 a.m. ET

EPS guidance reduced

Tiffany (TIF) disappointed investors with its first-quarter financial performance. Moreover, management lowered its full-year earnings outlook, which isn’t likely to sit well with investors. Tiffany’s bottom line is projected to continue to decline in the second quarter of fiscal 2019, reflecting soft sales, an adverse mix, and investments in growth.

Tiffany’s management now expects its full-year adjusted EPS to increase by low to mid-single digits. Earlier, Tiffany expected its fiscal 2016 earnings to mark mid-single-digit growth. A weak first-half performance, higher tariffs on exports from the US to China, and pressure on margins are expected to hurt Tiffany’s bottom line. However, share repurchases are expected to cushion the earnings.

Management expects full-year net sales to register low-single-digit growth. However, lower tourist spending is expected to remain a drag.

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Stock performance

Tiffany stock is up 12% so far this year. However, its stock has fallen about 11% since May 10. Pressure on sales and earnings from adverse currency rates, lower tourist spending, planned investments in growth, and higher tariffs took a toll on the stock prices of jewelry retailers.

Signet Jewelers (SIG) stock has fallen by 16% since May 10. Meanwhile, its stock is down about 40% on a YTD basis.


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