Tiffany (TIF) Q3 Earnings Beat, Revenues Miss, Stock Down

Tiffany & Co. (TIF - Free Report) reported third-quarter fiscal 2018 results, which marked the company’s tenth straight quarter of positive earnings surprise. However, sales fell short of the Zacks Consensus Estimate after surpassing the same in the five successive quarters. Although top line increased year over year, it failed to check the decline in the bottom line.

The company hinted that net sales grew due to increased spending by local customers, however, lower spending by foreign tourists, mainly Chinese, remains a drag. Management also highlighted that increased investment spending hurt the company’s quarterly earnings, while gross margin expansion and lower effective tax rate favorably impacted the same.

Tiffany reiterated its fiscal 2018 earnings projection but trimmed its comparable sales (comps) guidance. Meanwhile, shares of this Zacks Rank #3 (Hold) company are down roughly 11% during the pre-market trading session. In fact, the stock has plunged 16% in the past three months compared with the industry’s decline 13%.

Q3 Highlights

The company’s quarterly earnings of 77 cents a share beat the Zacks Consensus Estimate by a penny but declined roughly 4% year over year. Net sales came in at $1,012.4 million, up almost 4% from $976.2 million in the prior-year quarter. However, the reported figure came below the Zacks Consensus Estimate of $1,052 million.

Notably, the top line gained from sales improvement across most product categories and in all regions. Also, the company’s comps went up 2%. In constant currencies, worldwide net sales rose 5%, while comps improved by 3%.

Sales across Jewelry Collections and Engagement Jewelry grew 8% and 2%, respectively. On the contrary, sales across Designer Jewelry declined 8%. Increase in jewelry volumes led to mid-single-digit jump in net sales, in spite of lower spending by Chinese tourists in the United States and Hong Kong and fall in wholesale travel-retail sales in Korea.

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