uploads///drz __  unsplash

Tiffany’s First-Quarter Results Disappoint Investors

By

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

Key takeaways from Q1

Tiffany (TIF) posted mixed first-quarter results on June 4. Tiffany’s top line continued to decline and missed Wall Street’s estimate. Meanwhile, earnings stayed low. However, share repurchases helped the company to surpass analysts’ expectations.

Tiffany’s top-line fell about 3% on a YoY basis, reflecting lower comparable sales. Tiffany’s worldwide comparable sales fell 5%, reflecting weakness across most of its regions. Management blamed lower tourist spending for the decline. Moreover, adverse currency rates remained a drag.

Tiffany’s profit margins disappointed investors. Sales deleverage, unfavorable product mix, and higher wholesale diamond sales dragged margins down. Lower sales and earnings adversely affected its earnings, which declined 9.6% YoY.

In comparison, analysts expect rival Signet Jewelers also to disappoint with its first-quarter sales and earnings. Wall Street expects Signet’s net sales to decline on a YoY basis. Meanwhile, the company is likely to report losses during the first quarter.

Article continues below advertisement

Q1 financials

Tiffany posted net sales of $1.0 billion during the first quarter, which fell marginally short of Wall Street’s expectations and declined about 3% on a YoY basis. Comparable sales fell 5%, reflecting declines across all reportable segments. Tiffany’s gross margin contracted 130 basis points to 61.7%, reflecting weak sales and an adverse mix.

Tiffany posted earnings of $1.03 per share, which came in ahead of analysts’ expectation of $1.02. However, EPS declined 9.6% on a YoY basis. Tiffany raised its quarterly dividend by 5% to $0.58 per share.

Advertisement

More From Market Realist