>>> Tiffany & Co Earnings Preview

Tiffany & Co Earnings Preview
Tiffany & Co (TIF) is set to report Q3 results before the market opens tomorrow with a conference call to follow at 8:30 AM ET. Last quarter, results were released at 6:40 ET. The current Capital IQ consensus stands at EPS of $0.76 (vs. $0.76 last year) on revs +1% Y/Y to $957.2 mln.
  • Capital IQ Consensus estimates FY 17 diluted EPS of $3.99 (vs $3.74 in 2016) on revs +2% to $4.09 bln
  • Capital IQ Consensus estimates Q4 diluted EPS of $1.55 (vs $1.45 last year) on revs +3% Y/Y to $1.266 bln
FY 18 Guidance
  • Reaffirmed guidance for diluted EPS up mid-single-digit % Y/Y (2016 EPS was $3.75) to ~$3.94; implies EPS of $3.60-3.67
  • Assumptions for co to hit the EPS guidance
    • Worldwide net sales increasing lsd ($4.001 bln last year
    • Worldwide gross retail square footage increasing 2%, net through 10 openings, 7 relocations and 7 closings
    • Operating margin in-line w/ prior year due to an expected increase in gross margin offset by SG&A expense growth higher than sales growth
    • Mgmt. also expects (i) net cash provided by operating activities of ~$700 million and (ii) free cash flow of ~$450 million.
Q2 Recap
  • Reported Q2 (Jul) earnings of $0.92 per share, $0.06 better than the Capital IQ Consensus of $0.86; revenues rose 3.0% year/year to $960 mln vs the $930.19 mln Capital IQ Consensus.
  • Comparable store sales declined 2%.
  • Management noted an increase in wholesale sales of diamonds, increased wholesale sales in the Asia-Pacific region and strong e-commerce sales growth. Overall, growth in fashion and designer jewelry sales contrasted with softness in other jewelry categories.
  • On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales rose 4% and comparable store sales declined 1% due to the factors noted above.
  • In the Americas, total sales rose 1% to $439 million in the quarter and declined 1% to $830 million in the first half; comparable store sales declined 1% and 2%, respectively. In the Asia-Pacific region, total sales of $235 million in the quarter and $492 million in the first half were 2% and 5%, respectively, above the prior year; comparable store sales declined 7% and 5%. Gross margins (gross profit as a percentage of net sales) of 62.3% in the second quarter and 62.2% in the first half were higher than 61.9% and 61.6%, respectively, in the prior year.
Trading View: Shares have been trading slowly in its current 85/95 range since February and could be worth monitoring as a swing/bounce play on any sell-off to the 84/85 level. On the contrary, any strong break above its 97.29 resistance could lead to a run back above 100.