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Why Tiffany’s Q1 Sales and Earnings Could Tumble

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Jun. 3 2019, Updated 11:38 a.m. ET

Sales and earnings headwinds

Tiffany & Co. (TIF) will announce its fiscal 2019 first-quarter earnings results on June 4. We expect Tiffany’s sales and adjusted earnings to fall. Lower tourist spending owing to the strengthening of the US dollar, a decline in demand among local shoppers, and increased competition are expected to continue to hurt its sales.

The company also faces tough YoY (year-over-year) comparisons, which could restrict its sales. Tiffany’s top line rose 14.9% during the first quarter of fiscal 2018.

Meanwhile, an anticipated increase in marketing and incentive compensation and higher investments in technology and store presentation are likely to hurt Tiffany’s operating margins and, in turn, its adjusted EPS.

Weak sales and lower margins are expected to drag the company’s adjusted earnings down in the quarter.

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Wall Street’s expectations

Wall Street expects Tiffany to post net sales of $1.0 billion, which implies a YoY fall of 1.8%. Meanwhile, analysts expect Tiffany to post adjusted EPS of $1.02 in the first quarter, indicating a YoY fall of 10.5%.

Shares of Tiffany have taken a beating recently and have fallen ~15% since May 10. The ongoing US-China trade spat is hurting Tiffany stock, as investors are concerned that retaliatory trade tariffs will hurt jewelry retailers. Shares of rival Signet Jewelers (SIG) have also marked a fall of ~18% since May 10.

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