Tuesday, March 8, 2011

Tiffany & Co. (NYSE: TIF): Q4 Earnings Preview

Tiffany & Co. (NYSE: TIF), the world's second-largest luxury jewelry retailer, is scheduled to release its fourth-quarter earnings before the opening bell on Monday, March 21, 2011. Analysts, on average, expect the company to report earnings of $1.39 per share on revenue of $1.10 billion. In the year ago quarter, the company reported earnings of $1.09 per share on revenue of $981.38 million.

Tiffany & Co., through its subsidiaries, engages in the design, manufacture, and retail of fine jewelry. The company also sells timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories. As of December 2010, the Company operated 232 stores (96 in the Americas, 56 in Japan, 51 in Asia-Pacific and 29 in Europe), versus 220 stores a year ago (91 in the Americas, 57 in Japan, 45 in Asia-Pacific and 27 in Europe).

In the preceding third quarter, the New York-based company's net income was $55.1 million, or 43 cents a share, compared with a profit of $43.3 million, or 35 cents, in the year-ago quarter. On an adjusted basis, the company earned 46 cents a share in the latest quarter. Revenue rose 14% to $681.7 million from $598.2 million in the same quarter last year. Analysts, on average, had expected the company to report earnings of 37 cents per share on revenue of $653.32 million. 

Jewelry retailers like Tiffany have benefited from strong holiday season. Thanks to improved consumer confidence, shoppers are steadily returning to buying luxuries.In January, the company reported that its worldwide net sales in the two-month holiday period ended December 31, 2010 rose 11% over the prior year. On a constant-exchange-rate basis which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales and comparable store sales increased 10% and 8%. The company saw sales growth in every region in both months of the holiday period. Healthy sales growth was seen across most product categories, with particular strength in Tiffany's fine jewelry collections, diamond engagement rings and fashion gold jewelry. The company alaso lifted its earnings outlook for the fiscal year ending January 31, 2011 to reflect these higher-than-expected holiday period results. The company said that it remains on track  to achieve record sales and earnings (excluding nonrecurring items) in the fiscal year ending January 31, 2011. We now expect net sales of almost $3.1 billion and net earnings from continuing operations (excluding nonrecurring items) of $2.83 to $2.88 per diluted share, versus a previous forecast made in November of $2.72 to $2.77.

Tiffany is well-positioned to capture the rising tide in the global standard of living.. Tiffany holds a significant position in the world jewelry market and is poised to benefit from its increased geographic reach. The company now plans to expand its distribution network by adding stores in both the new and existing markets. Over the next five years, the company plans to open upwards of 20 new stores in China to go along with six in the Americas and three in Europe. The company has also been concentrating more on smaller-sized store formats that offer selected collections of lower-priced, higher-margin products.

During the quarter in review, the company announced a new share repurchase program. The Board of Directors authorized the company to buy back up to $400.0 million shares of its common stock over the next two years through open market or private transactions.

Full Disclosure: None.
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