Tiffany & Co (TIF) on Friday reported a 2% decline in comparable sales for the holiday period and said earnings for fiscal 2018 will be at the lower end of its prior guidance. The report comes after peer Signet Jewelers (SIG) also reported disappointing holiday sales.
TIFFANY: Tiffany & Co said Friday that its same-store sales fell 2% during the crucial holiday shopping period, while total worldwide net sales fell 1% to $1.04B during the two month period ended December 31. In a statement, CEO Alessandro Bogliolo blamed lower sales to foreign -- primarily Chinese -- tourists globally, as well as softening demand in the Americas and Europe. "Overall holiday sales results came in short of our expectations which had called for modest year-over-year growth," Bogliolo said, adding that sales were also impacted by "external events, uncertainties and market volatilities."
Tiffany now said it sees fiscal 2018 earnings per share at the lower end of its previous view of $4.65-$4.80, against analysts' consensus estimates of $4.77. The company sees worldwide net sales of 6%-7% growth vs. its previous view of a high-single-digit percentage growth over the prior year both as reported and on a constant-exchange-rate basis. The current consensus for FY18 revenue is $4.51B. Tiffany also sees FY18 SSS growth of mid-single digits and said it expects to report "record" levels of net sales and earnings in FY18. Looking to fiscal 2019, Tiffany sees EPS growth in the mid-single digits and global net sales up in the low-single digits. It sees a decline in net earnings in the first half of the year, reflecting sales pressures from lower foreign tourist spending and the effect of a stronger U.S. dollar as well as expenses related to the annualized effect of higher strategic investment spending that began in the second quarter of 2018.
SIGNET: Signet also reported holiday sales that fell short of expectations and slashed its outlook for Q4 and FY19. On Thursday, the jeweler said holiday season SSS fell 1.3% and noted that it saw "reduced traffic during key December gifting weeks." Signet lowered its Q4 adjusted EPS view to $3.77-$3.92 from $4.35-$4.59 and its SSS view to down 2.5%-down 1.5% from down 1.5% to up 1%. It also reduced its FY19 outlook, with adjusted EPS now at $3.53-$3.69 from $4.15-$4.40 and SSS of approximately flat from flat-up 1%.
WHAT'S NOTABLE: Many retailers, including Macy's (M), Nordstrom (JWN) and L Brands (LB), have had a difficult time this holiday season. Amazon (AMZN) said in late December that it had a "record-breaking" holiday season with more items ordered worldwide than ever before. Amazon customers shopped at record levels from a wide selection of products across every department, it said. "This season was our best yet, and we look forward to continuing to bring our customers what they want, in ways most convenient for them in 2019. We are thrilled that in the U.S. alone, more than one billion items shipped for free this holiday with Prime," said Jeff Wilke, CEO Worldwide Consumer at Amazon, said at the time.
ANALYST COMMENTARY: Loop Capital analyst Laura Champine maintained a Buy rating on Tiffany & Co but lowered her price target to $100 after updating her model for a reduction in sales driven by market volatility and lower sales to Chinese tourists. The stock is attractive given her longer-term expectations for top- and bottom-line growth and trades at 17.5x her F2019 EPS estimate and 10x F2019 EV/EBITDA, she said.
PRICE ACTION: In morning trading, shares of Tiffany & Co are up 3.5% to $88.20. Meanwhile, shares of Signet are currently up 1.4% to $25.48.
Tiffany
+2.83 (+3.32%)
Signet Jewelers
+0.4 (+1.59%)
Amazon.com
+11.03 (+0.65%)
Macy's
+0.65 (+2.63%)
Nordstrom
+1.02 (+2.22%)
L Brands
+0.12 (+0.44%)