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Tiffany (TIF) Beats on Q4 Earnings & Sales, Guides for '18

Tiffany & Co. TIF posted seventh straight quarter of positive earnings surprise, when it reported fourth-quarter fiscal 2017 results. The company’s quarterly earnings came in at $1.67 a share surpassing the Zacks Consensus Estimate of $1.63. The bottom line was up 15% from the year-ago tally on account of higher sales.

Net sales came in at $1,334.3 million, up 9% from $1,229.6 million in the prior-year quarter. The reported figure outpaced the Zacks Consensus Estimate of $1,305 million. The outperformance was driven by robust performance across all product categories. Moreover, comparable-store sales (comps) were up 3%. In constant currencies, worldwide net sales rose 6% and comps inched up 1%.

Moreover, Tiffany’s omni-channel platform, store expansion programs, tapping of new markets and venturing into new revenue generating avenues bode well for the company. In the past three months, the stock has gained 14.8% outperforming the industry’s decline of 0.7%.

 

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Let’s Delve Deeper

By geographic segments, sales in the Americas rose 5% to $619 million while comps increased by an equivalent rate. In the Asia-Pacific region, sales improved 13% to $320 million while comps grew 3%. In Japan, the metric was up 2% to $189 million while comps inched up 1%. Sales in Europe came in at $165 million, up 13% and comps rose 1%. Other sales came in at $41 million, up 48% while comps increased 6%.

Gross margin contracted 40 basis points to 63.7% in the quarter under review. Operating margin increased 210 basis points to 20.9%.

Store Update

In the fiscal year, this designer and retailer of fine jewelry opened nine stores and shuttered seven locations. As of Jan 31, 2018 the company operated 315 stores (124 in the Americas, 87 in Asia-Pacific, 54 in Japan, 46 in Europe, and four in the U.A.E.). Management now anticipates gross retail square footage growth of 2% on the back of nine openings, 15 relocations and two closings.

Other Financial Details

Tiffany ended the quarter with cash and cash equivalents and short-term investments of $1,291.2 million as well as total long-term debt of $882.9 million. In the quarter, this Zacks Rank #3 (Hold) company repurchased approximately 400,000 shares at an average cost of about $99 per share. As of Jan 31, 2018, the company had $211 million remaining under its $500 million buyback program that will run through Jan 31, 2019. Management anticipates capital expenditures of $280 million and expects to generate free cash flow of approximately $380 million in the current year.

Tiffany & Co. Price, Consensus and EPS Surprise

Tiffany & Co. Price, Consensus and EPS Surprise | Tiffany & Co. Quote

Guidance

For fiscal 2018, management anticipates net earnings per share in the range of $4.25-$4.45. Net sales are projected to increase by a mid-single-digit percentage on a reported and constant-exchange-rate basis. Comps for the fiscal year are expected to rise by low-to-mid-single-digit.

Key Picks

Movado Group, Inc. MOV delivered a positive earnings surprise in the preceding two quarters. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Burlington Stores, Inc. BURL delivered an average positive earnings surprise of 15% in the trailing four quarters. It has a long-term earnings growth rate of 18.6% and a Zacks Rank #2.

Dollar General Corporation DG pulled off an average positive earnings surprise of 3.7% in the trailing four quarters. The company has a long-term earnings growth rate of 11.6% and a Zacks Rank of 2.

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